The political economy of inequality, mobility and redistribution
How does the interaction between inequality and social mobility affect the choice of fiscal policy? I analyze this question in a model of democratic politics with imperfect tax enforcement, where the ability of individuals to evade taxes limits the amount of redistribution in the economy. Social mob...
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| Formato: | artículo |
| Fecha de publicación: | 2024 |
| País: | España |
| Recursos: | Universidad de Navarra |
| Repositorio: | Dadun. Depósito Académico Digital de la Universidad de Navarra |
| Idioma: | inglés |
| OAI Identifier: | oai:dadun.unav.edu:10171/70025 |
| Acesso em linha: | https://hdl.handle.net/10171/70025 |
| Access Level: | acceso abierto |
| Palavra-chave: | Inequality Social mobility Fiscal policy Tax evasion |
| Resumo: | How does the interaction between inequality and social mobility affect the choice of fiscal policy? I analyze this question in a model of democratic politics with imperfect tax enforcement, where the ability of individuals to evade taxes limits the amount of redistribution in the economy. Social mobility creates an insurance motive that increases voluntary compliance, favoring the tax enforcement process. In such an environment, redistributive pressures brought about by an increase in inequality are only implementable in highly mobile societies. On the contrary, when mobility is low, higher inequality reduces tax rates and does not translate into higher redistribution. Descriptive evidence based on a sample of 71 countries for the period 1980–2015 shows correlations among inequality, mobility and redistribution in line with the predictions of the model. |
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