Discussion Paper Details

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Title: Disincentives from Redistribution: Evidence on a Dividend of Democracy

Author(s): Rupert Sausgruber, Axel Sonntag and Jean-Robert Tyran

Publication Date: June 2019

Keyword(s): disincentive effect, Lab Experiment, Legitimacy, Real effort task, redistribution and voting

Programme Area(s): Public Economics

Abstract: We experimentally study the disincentive effect of taxing work and redistributing tax revenues when redistribution is imposed vs. democratically chosen in a vote. We find a "dividend of democracy" in the sense that the disincentive effect is substantially smaller when redistribution is chosen in a vote than when it is imposed. Redistribution seems to be more legitimate, and hence less demotivating, when accepted in a vote.

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Bibliographic Reference

Sausgruber, R, Sonntag, A and Tyran, J. 2019. 'Disincentives from Redistribution: Evidence on a Dividend of Democracy'. London, Centre for Economic Policy Research.