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DT 15/22 - Sectores de altos ingresos y preferencias por redistribución

ISSNISSN/ISBN: 1688-5090
AutorAuthor/s: Strehl, Matias
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The limited evidence regarding top incomes and preferences for redistribution indicates that, in the United States, individuals within the top 1% of income or wealth present less support for redistribution than the rest of the population. Democratic problems can arise from this since there is evidence that individuals with higher income or wealth exert a disproportionate influence on the political process. Economic models suggest that this relationship is expected given that, as income increases, the expected individual gains from redistributive policies decrease in terms of income. However, the literature has documented other channels, in addition to income, that explain how individuals shape their redistributive preferences. In particular, there are arguments to think that individuals with higher income or wealth may share a set of values, beliefs, and behavioral aspects that differentiate them from the rest of the population and lead them to support lower levels of redistribution. Using a novel data setting that combines tax records with a survey of social and economic preferences, this work aims to study the redistributive preferences of a set of workers belonging to the top 1% of formal earnings in Uruguay and compare them with those of workers that are above the median and immediately below the top 1%. I conclude that individuals in the top 1% support lower levels of redistribution and that not all differences can be associated with income level or sociodemographic characteristics. To investigate what other factors could be explaining these differences, I aim to explore the role of behavioral aspects measured from incentivized laboratory games, and that of perceptions, beliefs, and notions of justice captured through survey questions. The results suggest: (i) behavioral aspects seem to play a minor role in explaining differences in redistributive preferences; (ii) individuals from the top 1% share a set of beliefs, perceptions, and notions of justice that differentiate them from the lower-income group; and (iii) this particular set of beliefs, perceptions, and notions of justice is associated with a large part of the differences in support for redistribution observed between these two groups. In particular, the factors that are most associated with differences in support for redistribution between these two groups are political ideology, meritocratic beliefs, and visions about government.
 
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