In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution

Institute for Empirical Research in Economics University of Zurich Working Paper No. 425

60 Pages Posted: 23 Sep 2009

See all articles by Andreas Kuhn

Andreas Kuhn

University of Zurich; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2009

Abstract

This paper presents a simple conceptual framework intended for describing individuals' subjective evaluations of occupational wage inequality and their demand for redistribution. Most importantly, the framework explicitly allows for the distinction between individuals' perceptions and their normative beliefs. I illustrate the framework using Swiss survey data from the International Social Survey Program. While most individuals accept quite large wage differentials across occupations, they also prefer a lower level of overall wage inequality than what they perceive to exist. Consistent with previous evidence, the empirical analysis also shows that financial self-interest, social norms about distributive justice and perceptions of how wages are determined in reality all simultaneously influence the demand for redistribution. Finally, I show that subjective inequality measures and the demand for redistribution are substantially significant predictors of both individuals' support for government intervention and their party identification. This result provides indirect evidence on the presumed link between perceptions and beliefs on the one hand and and political outcomes on the other hand.

Keywords: subjective inequality measures, demand for redistribution, distributive justice, party identification, support for the welfare state

JEL Classification: D3, D63, H1

Suggested Citation

Kuhn, Andreas, In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution (August 22, 2009). Institute for Empirical Research in Economics University of Zurich Working Paper No. 425, Available at SSRN: https://ssrn.com/abstract=1476855 or http://dx.doi.org/10.2139/ssrn.1476855

Andreas Kuhn (Contact Author)

University of Zurich ( email )

Bluemlisalpstrasse 10
Zurich, 8006
Switzerland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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