DP13773 Disincentives from Redistribution: Evidence on a Dividend of Democracy

Author(s): Rupert Sausgruber, Axel Sonntag, Jean-Robert Tyran
Publication Date: June 2019
Keyword(s): disincentive effect, Lab Experiment, Legitimacy, Real effort task, redistribution, voting
JEL(s): C92, D31, D72, H23
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13773

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.