Disincentives from Redistribution: Evidence on a Dividend of Democracy

Rupert Sausgruber, Axel Sonntag, Jean-Robert Tyran

Publications: Contribution to journalArticlePeer Reviewed

Abstract

We experimentally study the disincentive effect of taxing work and redistributing tax revenues when redistribution is imposed vs. democratically chosen in a vote. We find a “dividend of democracy” in the sense that the disincentive effect is substantially smaller when redistribution is chosen in a vote than when it is imposed. Redistribution seems to be more legitimate, and hence less demotivating, when accepted in a vote.
Original languageEnglish
Article number103749
Number of pages30
JournalEuropean Economic Review
Volume136
DOIs
Publication statusPublished - Jul 2021

Austrian Fields of Science 2012

  • 502057 Experimental economics
  • 502010 Public finance
  • 502027 Political economy

Keywords

  • AVERSION
  • COOPERATION
  • Disincentive effect
  • FAIRNESS
  • INCOME-REDISTRIBUTION
  • INDUCE
  • Lab experiment
  • Legitimacy
  • PEER PRESSURE
  • PREFERENCES
  • REAL-EFFORT
  • Real-effort task
  • Redistribution
  • TAX COMPLIANCE
  • Voting
  • WELFARE-STATE

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