TY  - JOUR
AU  - Rotemberg,Julio J.
TI  - Perceptions of Equity and the Distribution of Income
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5624
PY  - 1996
Y2  - June 1996
UR  - http://www.nber.org/papers/w5624
L1  - http://www.nber.org/papers/w5624.pdf
N1  - Author contact info:
Julio J. Rotemberg
Graduate School of Business
Harvard University, Morgan Hall
Soldiers Field
Boston, MA  02163
Tel: 617/495-1015
Fax: 617/496-5994
E-Mail: jrotemberg@hbs.edu
AB  - This paper builds a simple model where there is a link between employees' perception of the fairness  of employers and the actual distribution of income.  Wages are based in part on employers' assessments of the productivity of individual employees.  I show that the equilibrium distribution of income depends on the beliefs of employees concerning the accuracy of these evaluations.  I give conditions under which the distribution of income across employees of the same vintage is more equal if employees believe that these evaluations are generally inaccurate (so that they are skeptical of capitalists in general) than when they believe that these evaluations are accurate.  The model is consistent with the fact that, in a sample of seven countries, the distribution of income is more unequal in countries where people feel that income inequality is not too large.
ER  -