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Preferences over equality in the presence of costly income sorting

Author

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  • Levy, Gilat
  • Razin, Ronny
Abstract
We analyze preferences over redistribution in societies with costly (positive) sorting according to income. We identify a new motivation for redistribution, where individuals support taxation in order to reduce the incentives to sort. We characterize a simple condition over income distributions which implies that even relatively rich voters—with income above the mean—will prefer full equality (and thus no sorting) to societies with costly sorting. We show that the condition is satisfied for relatively equal income distributions. We also relate the condition to several statistical properties which are satisfied by a large family of distribution functions.

Suggested Citation

  • Levy, Gilat & Razin, Ronny, 2015. "Preferences over equality in the presence of costly income sorting," LSE Research Online Documents on Economics 59053, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:59053
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    File URL: http://eprints.lse.ac.uk/59053/
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    Cited by:

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    2. Andrea Gallice & Edoardo Grillo, 2022. "Legitimize through Endorsement," Carlo Alberto Notebooks 680 JEL Classification: C, Collegio Carlo Alberto.
    3. Gallice, Andrea, 2018. "Social status, preferences for redistribution and optimal taxation: A survey," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-17.
    4. Davis, Lewis S., 2018. "Political economy of growth with a taste for status," Journal of Public Economics, Elsevier, vol. 168(C), pages 35-46.
    5. Lisa Windsteiger, 2018. "Monopolistic Supply of Sorting, Inequality and Welfare," Working Papers tax-mpg-rps-2018-15, Max Planck Institute for Tax Law and Public Finance.
    6. Lisa Windsteiger, 2018. "Sorting in the Presence of Misperceptions," Working Papers tax-mpg-rps-2018-08, Max Planck Institute for Tax Law and Public Finance.
    7. Bilancini, Ennio & Boncinelli, Leonardo, 2020. "When today’s rewards are tomorrow’s endowments: The effects of inequality on social competition," European Economic Review, Elsevier, vol. 129(C).
    8. Adriani, Fabrizio & Sonderegger, Silvia, 2019. "A theory of esteem based peer pressure," Games and Economic Behavior, Elsevier, vol. 115(C), pages 314-335.
    9. Dotti, Valerio, 2020. "Income inequality, size of government, and tax progressivity: A positive theory," European Economic Review, Elsevier, vol. 121(C).
    10. Ferrari, Luca, 2018. "Social limits to redistribution and conspicuous norms," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-21.
    11. Staab, Manuel, 2019. "The Formation of Social Groups under Status Concern," MPRA Paper 97114, University Library of Munich, Germany.
    12. Windsteiger, Lisa, 2022. "The redistributive consequences of segregation and misperceptions," European Economic Review, Elsevier, vol. 144(C).

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    More about this item

    Keywords

    costly sorting; redistribution; income distributions;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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