Equal Opportunities for All? How Income Redistribution Promotes Support for Economic Inclusion

Author(s)
Ilona Reindl, Jean-Robert Tyran
Abstract

We experimentally investigate how income redistribution shapes support for economic inclusion, i.e., a policy that creates equality of opportunity for income generation. We study a setting in which low-endowment subjects are excluded from investment opportunities unless those with high endowments transfer resources to the low-endowment subjects. We find that support for economic inclusion is stronger among high-endowment subjects if incomes are known to be redistributed in the future compared to a situation in which this is precluded by design. Income redistribution spreads both risks and returns of investments in the population which, in turn, induces a higher rate of profitable investments, and this prospect tends to foster support for economic inclusion. Income redistribution thus induces more equal and efficient outcomes by boosting popular support for economic inclusion.

Organisation(s)
Vienna Center for Experimental Economics, Department of Economics
External organisation(s)
University of Copenhagen, Centre for Economic and Policy Research
No. of pages
36
Publication date
2020
Austrian Fields of Science 2012
502057 Experimental economics, 502045 Behavioural economics, 502010 Public finance
Keywords
Portal url
https://ucris.univie.ac.at/portal/en/publications/equal-opportunities-for-all-how-income-redistribution-promotes-support-for-economic-inclusion(834d582b-e6d8-4c19-9638-d45d704daaec).html