SFB 303 Discussion Paper No. A - 520
Author: Corneo, Giacomo, and Hans Peter Grüner
Title: Social Limits to Redistribution
Abstract: We argue that the desire of the median voter to maintain his
social position may be the crucial factor limiting the extent of
redistribution in democracies. Social limits to redistribution arise
when economic inequality has an informational value for social
decisions, and therefore redistribution affects how well individuals
fare in social interactions. In some identifiable circumstances,
middle-class voters will be willing to provide political support to
conservative taxation programs just in order to minimize the scope of
competition with the poor in the social sector. Different amounts of
redistribution can thus be explained by different organizations of
social competition. Redistributive taxation is shown to respond in an
unconventional manner to changes in pre-tax inequality.
Keywords: Redistributive politics, social status
JEL-Classification-Number: D31, D72, H23
Creation-Date: April 1996
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