Summation
How Much Does U.S. Fiscal System Redistribute?
Thomas Coleman & David Weisbach
University of Chicago Working Paper, November 2024
Abstract:
There is a widespread view that the tax and transfer system has become less progressive and less redistributive. To assess this view, we compare data from three studies: Congressional Budget Office (2024), Piketty, Saez, Zucman (2018), and Auten and Splinter (2024). Although they use different definitions of income, units, and taxes and transfers, all three show that the tax and transfer system has become more redistributive, not less. We also review all studies of the issue since 2012, which confirms these findings. In short, there is robust evidence across definitions and methodologies, that the tax system has become more redistributive.
Demographic Preferences and Income Segregation
Victor Couture et al.
NBER Working Paper, January 2025
Abstract:
We study how preferences over the demographic composition of co-patrons affects income segregation in shared spaces. To distinguish demographic preferences from tastes for other venue attributes, we study venue choices within business chains. We find two notable regularities: preferences for high-income co-patrons are similar across racial groups, and racial homophily does not vary by income. These demographic preferences are economically large, explain much of the cross-group variation in exposure to high-income co-patrons, and correlate with movers' neighborhood choices.
Income, education, and policy priorities
Chris Tausanovitch & Derek Holliday
Political Science Research and Methods, forthcoming
Abstract:
Are people's priorities associated with their income and education levels? There is a long history in political science of claims that priorities are driven by economic interests, but also that low-income and low-education people fail to prioritize their economic interests. In this paper we use measures of revealed importance from [Sides J, Tausanovitch C and Vavreck L (2023) The Bitter End: The 2020 Presidential Campaign and the challenge to American Democracy. Princeton University Press.] to evaluate the priorities of high- and low-income/education voters with respect to 44 different policies. It is well known that there are substantial differences in the preferences of people with lower incomes or education levels and people with higher incomes or education levels, but conditional on preferences we find very small differences among education and income groups in terms of priorities. Like high-income and high-education voters, lower-income and education voters care most about the major issues of the day. They do not care systematically more or less than other voters about policies that expand social welfare, redistribution, or labor rights.
Adoption, Inheritance, and Wealth Inequality in Pre-industrial Japan and Western Europe
Yuzuru Kumon
Journal of Economic History, forthcoming
Abstract:
This paper uses Japanese village censuses, 1637–1872, to measure inequality in landownership. Surprisingly, inequality was low and stable, unlike in Europe, where it was high and increasing. To explain this, I study inter-generational land transmissions. I find that Japanese households without sons adopted male heirs, thereby keeping lands in the family. In contrast, elite English male lines failed 20–30 percent of the time as adoptions were uncommon, leading to a highly unequal redistribution of their lands. Finally, the institutional differences in adoption had roots in fourth-century church policy, and this may partially explain why Europe was more unequal by 1800.
Love Doesn’t Run Out: Children and Adults Do Not View Social Resources as Inherently Zero-Sum
Kevin Wei & Fan Yang
Social Psychological and Personality Science, forthcoming
Abstract:
It is not uncommon to witness individuals competing for social resources such as affection and status. Does this mean that people view social resources as inherently zero-sum—where gains for one person result in losses for another? Two preregistered studies found that U.S. adults and 4- to 9-year-old U.S. children did not view nonrival social resources (love and trust) or rival social resources (popularity and leadership) as zero-sum, both less zero-sum than material resources like stickers. Importantly, zero-sum thinking was not determined by the inherent properties of the resources but was influenced by renewability: Perceived renewability of resources predicted lower levels of zero-sum beliefs, and both social and material resources were perceived as less zero-sum when presented as renewable compared with nonrenewable. These findings shed light on the nature and origins of zero-sum beliefs, highlighting renewability as a key mechanism and a potential intervention for reducing competition and promoting cooperation.
Reassessing the great compression among top earners: The overlooked role of taxation and self-employment
Miguel Artola Blanco & Victor Manuel Gómez-Blanco
Explorations in Economic History, April 2025
Abstract:
This paper provides new estimates of wage inequality in the United States from 1918 to 1949, leveraging a novel top-income methodology that integrates both tax records and census data. Our analysis reveals no sustained decline in wage inequality before the Second World War but a marked decrease during the war years. This decline was driven primarily by stagnation among the top 1% of earners and significant wage growth at the lower end of the income distribution. However, the relative underperformance of the top earners was largely influenced by a major compositional shift triggered by unprecedented increases in corporate and personal income tax rates. These tax changes led to a shift in business preferences toward partnerships, resulting in a substantial transition from salaried employment to self-employment. This shift, previously overlooked in inequality studies, resulted in a 30% overestimation of wage compression, significantly altering the wage distribution dynamics of the 1940s.
Power Distance Moderates the Relation Between Income Inequality and Life Satisfaction: A Cross-Country Longitudinal Analysis
Kodai Kusano, Laura Giuntoli & Anne Maass
Personality and Social Psychology Bulletin, forthcoming
Abstract:
Despite extensive research, the relationship between income inequality and life satisfaction remains unclear, with some countries experiencing negative consequences, while others show neutral or positive outcomes. Using data from the Gallup World Poll (2006–2022) with nearly two million respondents from more than 110 countries, we disentangle the distinct within-country and between-country effects of inequality. Our multilevel analyses reveal a significant within-country effect: Temporal increases in inequality are associated with decreases in life satisfaction. At the between-country level, power distance -- a cultural dimension reflecting tolerance for social disparities -- moderates the relationship. In low power distance countries, higher inequality strongly predicts lower life satisfaction, whereas in high power distance countries, the effect is nonsignificant. These findings are robust across two measures of income inequality and controls for wealth and individualism, offering a refined methodological and cultural interpretation to resolve inconsistencies in prior cross-national research.
When is it Fair to Tax the Rich? The Importance of Pro-Social Behavior
Kris-Stella Trump
Comparative Political Studies, forthcoming
Abstract:
Politicians, activists, and the rich themselves variously describe rich people as hard workers, greedy tax avoiders, generous philanthropists, and more. Occasionally, such descriptions are wielded in attempts to legitimize or delegitimize high income taxes on the rich. However, we do not have a good understanding of which of these appeals are most successful. This article explores which attributes of the rich affect support for progressive taxation. First, I use an inductive approach to derive relevant attributes from open-ended survey responses and prior literature. Then, pre-registered experiments in the United States and Denmark show that when the rich exhibit pro-social behaviors (e.g., treating workers well, not using tax loopholes), this reduces public support for taxing them. In comparison, indicators of merit (e.g., working hard) are of secondary or even insignificant importance. I conclude that in redistributive politics, the perceived pro-social behavior of the rich is a key consideration for the public.