Support for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations

TitleSupport for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations
Publication TypeJournal Article
Year of Publication2015
AuthorsAshok V, Kuziemko I, Washington E
JournalBrookings Papers on Economic Activity
Pagination - 405
Date PublishedApril 2015
ISBN Number0007-2303, 0007-2303
KeywordsDemographics, Economics of Minorities, Races, Indigenous Peoples, and Immigrants, Non-labor Discrimination (J15), Economics of the Elderly, Economics of the Handicapped, Non-labor Market Discrimination (J14), Elderly, Europe, Germany, Health, Health Insurance, Public and Private (I13), Income, Inequality, Northern America, Personal Income, Wealth, and Their Distributions (D31), Race, Redistribution, Sweden, Taxation and Subsidies: Externalities, Redistributive Effects, Environmental Taxes and Subsidies (H23), U.K., U.S., Welfare, Well-Being, and Poverty: Government Programs, Provision and Effects of Welfare Programs (I38)
AbstractDespite the large increases in economic inequality since 1970, American survey respondents exhibit no increase in support for redistribution, contrary to the predictions from standard theories of redistributive preferences. We replicate these results but further demonstrate substantial heterogeneity by demographic group. In particular, the two groups that have most moved against income redistribution are the elderly and African Americans. We find little evidence that these subgroup trends are explained by relative economic gains or growing cultural conservatism, two common explanations. We further show that the trend among the elderly is uniquely American, at least relative to other developed countries with comparable survey data. While we are unable to provide definitive evidence on the cause of these two groups' declining redistributive support, we provide additional correlations that may offer fruitful directions for future research on the topic. One story consistent with the data on elderly trends is that older Americans worry that redistribution will come at their expense, in particular through cuts to Medicare. We find that the elderly have grown increasingly opposed to government provision of health insurance and that controlling for this tendency explains about 40 percent of their declining support for redistribution. For blacks, controlling for their declining support for race-targeted aid explains nearly 45 percent of their differential decline in redistributive preferences, which raises a further question: Why has support for race-targeted aid fallen during a period when black economic catch-up to whites has stalled?