Property, redistribution, and the status quo: a laboratory study
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Property, redistribution, and the status quo: a laboratory study Konstantin Chatziathanasiou1 · Svenja Hippel2 · Michael Kurschilgen3,4 Received: 15 April 2020 / Revised: 30 July 2020 / Accepted: 24 September 2020 © The Author(s) 2020
Abstract We report experimental evidence showing a positive effect of redistribution on economic efficiency via the self-enforcement of property rights, and identify which status groups benefit more and which less. We model an economy in which wealth is produced if players voluntarily comply with the—efficient but inequitable—prevailing social order. We vary exogenously whether redistribution is feasible, and how it is organized. We find that redistribution benefits all status groups as property disputes recede. It is most effective when transfers are not discretionary but instead imposed by some exogenous administration. In the absence of coercive means to enforce property rights, it is the higher status groups, not the lower status groups, who benefit from redistribution being compulsory rather than voluntary. Keywords Redistribution · Property · Status · Correlated equilibrium · Battle of the sexes · Experiment JEL Classification C72 · C92 · D74 · H23 · P48
We thank Ernesto Dal Bó, Marco Casari, Christoph Engel, Willemien Kets, Oliver Kirchkamp, Tatiana Kornienko, Ulrike Malmendier, Isabel Marcin, Moti Michaeli, Rosemarie Nagel, J. J. Prescott, Daniel Salicath, Cornelius Schneider, Sebastian Siegloch, and Theresa Wenning, as well as seminar participants at U Bayreuth, U Marburg, U Passau, and LMU Munich for valuable comments on earlier versions of the paper. Financial support of the Max Planck Society is gratefully acknowledged. Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1068 3-020-09685-5) contains supplementary material, which is available to authorized users. * Michael Kurschilgen [email protected] Extended author information available on the last page of the article
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1 Introduction How does redistribution affect a person’s economic status? Conceiving redistribution simply as a means to channel wealth from the relatively rich to the relatively poor, the answer is pretty straightforward: it helps the poor, and hurts the rich. Yet the truth is likely to be more complex. A large strand of research in public and monetary economics describes negative behavioral responses to redistribution like lower labor supply, lower effort, and higher expenditures for tax professionals (for an overview of the vast theoretical and empirical literature, see Trabandt and Uhlig (2011), Saez et al. (2012), and Doerrenberg et al. (2017)). If the dead-weight loss is large, redistribution could potentially hurt both the rich and the poor. On the other hand, redistribution might also have a positive effect on economic efficiency by reducing conflict over property rights (Grossman 1994, 1995; Bös and Kolmar 2003; Dal Bó and Dal Bó 2011). But to this day there is no causal empirical evide
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