Your Place in the World: The Demand for National and Global Redistribution

Dietmar Fehr, Johanna Mollerstrom, Ricardo Perez-Truglia

NBER Working Paper No. 26555
Issued in December 2019, Revised in May 2020
NBER Program(s):International Trade and Investment, Law and Economics, Public Economics, Political Economy

Some of today’s most heated policy debates about Brexit, trade wars, climate change abatement, and migration involve redistribution of resources within a given country (national redistribution) and between countries (global redistribution). Nevertheless, theories and evidence on preferences for redistribution have focused almost exclusively on national redistribution. In this paper, we study preferences for global redistribution. The workhorse model in political economy predicts that individuals with incomes in the upper levels of the national income distribution are less supportive of national redistribution than those with incomes in the lower levels. Applied to the global arena, the model predicts that individuals who are richer in the global income distribution will be less supportive of global redistribution. We test this hypothesis using a two-year, face-to-face survey of a representative sample of German households. We show that respondents are misinformed about their positions in the national and global income distributions, and we provide novel evidence that those misperceptions are meaningful. Consistent with previous studies, we find support for the political economy model in the national arena: the correlational and experimental estimates indicate that the demand for national redistribution decreases with national relative income. However, the political economy model does not hold in the global arena: support for global redistribution does not depend on global relative income, but instead on national relative income.

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Document Object Identifier (DOI): 10.3386/w26555

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