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Begin New Search Topic Redistribution Political Geography United States of America

1. Inequality of Opportunity and Income Redistribution

Author:
Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We examine how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We elicit redistribution decisions from a U.S.- representative sample who observe worker outcomes and whether luck magnified workers’ effort (“lucky opportunities”) or determined workers’ income directly (“lucky outcomes”). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. Our findings have implications for models that seek to understand and predict redistribution attitudes, and help to explain the gap between lab evidence on support for redistribution and U.S. inequality trends.
Topic:
Inequality, Redistribution, and Income
Political Geography:
North America and United States of America

2. Inequality of Opportunity and Income Redistribution

Author:
Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We examine how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We elicit redistribution decisions from a U.S.- representative sample who observe worker outcomes and whether luck magnified workers’ effort (“lucky opportunities”) or determined workers’ income directly (“lucky outcomes”). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. Our findings have implications for models that seek to understand and predict redistribution attitudes, and help to explain the gap between lab evidence on support for redistribution and U.S. inequality trends.
Topic:
Inequality, Economy, Redistribution, and Income
Political Geography:
North America and United States of America

3. Why do Preferences for Redistribution Differ Across Countries?

Author:
Gianluca Grimalda, Francesco Farina, Anna Conte, and Ulrich Schmidt
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We test for different theories purporting to explain cross-country differences in income redistribution through standardized experimental choices. US Americans and Italians demand less redistribution than Norwegians and Germans, regardless of whether self-interest is relevant. Those earning (or expecting to earn) below-median incomes behave as "libertarians" more frequently in the US and Italy than in Germany and Norway. Above-the-median earners behave similarly across countries. Higher overconfidence by US Americans and Italians further reduces their demand for redistribution under uncertainty. The "Prospect of Upward Mobility" hypothesis holds similarly in all countries. US Americans do not reward individual merit more than others.
Topic:
Economic Mobility, Redistribution, Income Distribution, and Behavioral Economics
Political Geography:
Europe, Italy, North America, and United States of America

4. The Value-Extracting CEO: How Executive Stock-Based Pay Undermines Investment in Productive Capabilities

Author:
William Lazonick
Publication Date:
12-2016
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest in productive capabilities, the company can afford to make cash distributions to shareholders. Motivating corporate resource- allocation decisions are the modes of remuneration that incentivize and reward the top executives of these companies. A sound analysis of the operation and performance of a modern economy requires an understanding of not only how much these executives are paid but also the ways in which the prevailing system of executive pay influences their decisions to allocate corporate resources. In the United States since the last half of the 1980s the overriding goal of U.S. corporations has been to “maximize shareholder value,” with corporate performance measured by a company’s “total shareholder return”: percentage stock-price appreciation plus dividend yield. Also since the 1980s, the most important components of the total compensation of senior executives have been modes of stock-based pay in the forms of stock options and stock awards. This stock-based pay is structured to incentivize executives to make corporate allocation decisions that will boost the stock prices of the companies that employ them and reward them for achieving that objective. There are three drivers of stock prices: innovation, speculation, and manipulation. The first critical question that this paper addresses is which of these drivers, individually or in combination, contribute to a company’s stock-price performance. Then we can ask the second critical question: Does executive compensation reflect the success of the company in value creation, or the power of senior executives to engage in value extraction? The “value- extracting CEO” hypothesis posits that, in the United States, a significant portion of senior executive compensation rewards them for making decisions that foment speculation and manipulate stock prices, and thereby extract value for their own personal gain. In section four of the paper, I invoke the theory of innovative enterprise to support this hypothesis and debunk the dominant ideology that companies should be run to “maximize shareholder value.” Finally, I elaborate the policy implications for controlling the power of the value-extracting CEO, including a) banning stock buybacks, b) requiring executive compensation that rewards innovation rather than speculation and manipulation, and c) placing stakeholders representing households as taxpayers, workers, and consumers on boards of directors of publicly listed companies, along with shareholders who represent households as savers. An intellectual precondition for these reforms is the rejection of the ideology that companies should be run to maximize shareholder value, which means replacing agency theory with innovation theory as a mode of analyzing how the operation of an economy, supported by the strategies and structures of the business enterprises within it, can attain the objectives of stable and equitable economic growth.
Topic:
Leadership, Investment, Corporations, Redistribution, Stock Markets, and Wage Growth
Political Geography:
North America and United States of America

5. Economic Recessions and Congressional Preferences for Redistribution

Author:
Maria Carreri and Edoardo Teso
Publication Date:
07-2016
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We analyze the roots of politicians’ preferences for redistribution by exploring whether early life experiences have persistent, long-run effects on U.S. Members of Congress’ voting records. We study whether having experienced an economic recession during early adulthood affected their positions on redistribution-specific bills during the period 1957–2012. We find that politicians who experienced a recession hold more conservative positions on redistribution, even compared to members of the same party in the same legislature. We rule out alternative accounts and show that experiencing a recession directly affects future politicians’ personal preferences. In light of recent empirical evidence showing that voters become more supportive of redistribution following a recession, our findings suggest that macroeconomic shocks have a polarizing effect: recessions can create an ideological wedge between voters and their future representatives.
Topic:
Politics, Economy, Redistribution, and Recession
Political Geography:
United States of America

6. Veiled Repression: Mainstream Economics, Capital Theory, and the Distributions of Income and Wealth

Author:
Lance Taylor
Publication Date:
12-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The Cambridge UK vs USA capital theory debates of the 1960s showed that the workhorse mainstream growth model relies on unsustainable assumptions. Its standard interpretation is not consistent with the last four decades of data. Part of an estimated increase in the ratio of personal wealth to income in recent years is due to higher asset prices. The other side of the accounts reveals that financialization and growing business debt partially offset the greater net worth of households. Attempts to interpret growth in wealth principally as a consequence of capitalization of rents are misleading. An alternative growth model based on Cambridge ideas can help correct these misinterpretations.
Topic:
Economics, Income Inequality, Economic Theory, Repression, Capital, Redistribution, and Wealth
Political Geography:
North America and United States of America

7. Wealth Concentration, Income Distribution, and Alternatives for the USA

Author:
Lance Taylor, Özlem Ömer, and Armon Rezai
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
US household wealth concentration is not likely to decline in response to fiscal interventions alone. Creation of an independent public wealth fund could lead to greater equality. Similarly, once-off tax/transfer packages or wage increases will not reduce income inequality significantly; on-going wage increases in excess of productivity growth would be needed. These results come from the accounting in a simulation model based on national income and financial data. The theory behind the model borrows from ideas that originated in Cambridge UK (especially from Luigi Pasinetti and Richard Goodwin).
Topic:
Inequality, Income Inequality, Tax Systems, Redistribution, and Wealth
Political Geography:
North America and United States of America

8. Wealth Concentration, Income Distribution, and Alternatives for the USA

Author:
Lance Taylor, Özlem Ömer, and Armon Rezai
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
US household wealth concentration is not likely to decline in response to fiscal interventions alone. Creation of an independent public wealth fund could lead to greater equality. Similarly, once-off tax/transfer packages or wage increases will not reduce income inequality significantly; on-going wage increases in excess of productivity growth would be needed. These results come from the accounting in a simulation model based on national income and financial data. The theory behind the model borrows from ideas that originated in Cambridge UK (especially from Luigi Pasinetti and Richard Goodwin).
Topic:
Inequality, Income Inequality, Tax Systems, Redistribution, and Wealth
Political Geography:
North America and United States of America