The Efficient Side of Progressive Income Taxation

This paper examines the allocative implications of progressive income taxation when individuals care about their relative income. It shows that tax progressivity might improve efficiency, and the more so in egalitarian economies. Introducing a progressive income tax can yield a Pareto improvement if pre-tax income is evenly distributed. Implementing undistorted choices of working hours requires a progressive tax schedule, and the optimal degree of progressivity decreases with pre-tax income inequality.Progressive income tax, inequality, social status

Work Norms and the Welfare State

Many European countries still provide their citizens with social insurance programs of unprecedented generosity. A cultural critique of the welfare state contends that generous social insurance has detrimental effects on work norms. This paper revisits the model of endogenous work ethic developed by Lindbeck and Nyberg (2006) and explores survey evidence on the relationship between social spending and pro-work attitudes. Both theoretical and empirical support of the cultural critique to the welfare state are found to be fragile. Furthermore, the empirical relationship between individual work ethic and individual income is shown to be non-monotonic, suggesting that weaker work norms needs not harm economic performance.welfare state, work ethic, symbolic values, social insurance

Charity and redistributive taxation in a unionized economy

European economies are characterized by unionized labor markets and a pronounced governmental redistribution of income. This paper studies a model where those two features are combined with the possibility for individuals to make charitable contributions to the poor. The model exhibits equilibrium unemployment that increases with the degree of altruism. It is shown that a more progressive income tax can both reduce the unemployment rate and improve the public budget. These results are driven by charity increasing wage pressure and the altruistic rich failing to internalize the effect of their donations on the wage setting behavior of the unions. --Equilibrium Unemployment,Income Tax,Charity,Trade Unions

Media Capture in a Democracy: The Role of Wealth Concentration

Since objective news coverage is vital to democracy, captured media can seriously distort collective decisions. The current paper develops a voting model where citizens are uncertain about the welfare effects induced by alternative policy options and derive information about those effects from the mass media. The media might however secretly collude with interest groups in order to influence the public opinion. In the case of voting over the level of a productivity-enhancing public bad, it is shown that an increase in the concentration of firm ownership makes the occurrence of media bias more likely. Although media bias is not always welfare worsening, conditions for it to raise welfare are restrictive.mass media, public bads, voting, wealth inequality

Media capture in a democracy: the role of wealth concentration

Since objective news coverage is vital to democracy, captured media can seriously distort collective decisions. The current paper develops a voting model where citizens are uncertain about the welfare eþects induced by alternative policy options and derive information about those eþects from the mass media. The media might however secretly collude with interest groups in order to in.uence the public opinion. In the case of voting over the level of a productivity-enhancing public bad, it is shown that an increase in the concentration of firm ownership makes the occurrence of media bias more likely. Although media bias is not always welfare worsening, conditions for it to raise welfare are restrictive. --Mass Media,Public Bads,Voting,Wealth Inequality

Symbolic Values, Value Formation and Interpersonal Relations

Interpersonal relations are shaped by the judgements associated with the social categories that individuals perceive in their social contacts. I develop a model of how those judgments form based on a theory of symbolic values. The model depicts the interaction between two values, one associated with an inherited ethnic trait ("nationality") and one with an endogenous achievement trait ("income"). Individuals who are less likely to achieve are predicted to invest more value on nationalism and to have hostile relations with immigrants. Multiple equilibria are possible and better schooling may eliminate equilibria with xenophobia. Econometric findings from three large surveys corroborate the predictions derived from the theoretical model.nationalism, immigration, interpersonal relations, value systems

Nationalism, cognitive ability, and interpersonal relations

Interpersonal relations are shaped by the judgements associated with the social categories that individuals perceive in their social contacts. I develop a model of how those judgments form based on a theory of symbolic values. The model depicts the interaction between two values, one associated with an inherited ethnic trait (nationality) and one with an endogenous achievement trait (income). Individuals with lower cognitive ability are predicted to invest more value on nationalism and to have hostile relations with immigrants. Multiple equilibria are possible and better schooling may eliminate equilibria with xenophobia. Econometric findings based on data from three large surveys corroborate the predictions derived from the theoretical model. --nationalism,xenophobia,interpersonal relations,value systems

Income Inequality and Self-Reported Values

This paper offers a comprehensive econometric investigation of the impact of income inequality on the values endorsed by people. Using survey data from all thirty-four OECD countries over a period of almost thirty years, the following dimensions of value systems are investigated: work ethic, civism, obedience, honesty, altruism, and tolerance. In most cases, no robust effects from inequality on values are detected. However, there is evidence that a more unequal income distribution strengthens the work ethic of the population. Thus, income inequality seems to generate work incentives not only via the pecuniary reward of work but also through the symbolic reward it receives

Deutschland, 1977 - 2011

Dieser Beitrag schildert die Entwicklung der relativen Bezahlung der Hochqualifizierten in Staat und Privatwirtschaft in Westdeutschland seit 1977. Es zeigt sich, dass seit ca. 1987 die relative Bezahlung der Hochqualifizierten im öffentlichen Dienst im Vergleich zur Privatwirtschaft massiv zurückgegangen ist: Gegenüber vergleichbaren Stellen in der Privatwirtschaft beträgt der relative Rückgang zwischen 25 % und 55 %. Dieser beträchtliche Verlust an Wettbewerbsfähigkeit seitens des öffentlichen Dienstes suggeriert, dass in dieser Zeit eine bedeutsame Verschiebung bei der Befriedigung von Bedürfnissen stattgefunden hat: von sozialen hin zu privaten Bedürfnissen

Symbolic values, occupational choice, and economic development

Channeling human resources into the right occupations has historically been a key to economic prosperity. Occupational choices are not only driven by the material rewards associated with the various occupations, but also by the esteem that they confer. We propose a model of endogenous growth in which occupations carry a symbolic value that makes them more or less attractive; the evolution of symbolic values is endogenous and determined by purposive transmission of value systems within families. The model sheds light on the interaction between cultural and economic development and identifies circum- stances under which value systems matter for long-run growth. It shows the possibility of culturally determined poverty traps and offers a framework for thinking about the transition from traditional to modern values. --symbolic values,occupational choice,economic development,long-run growth.