Why does the amount of income redistribution differ between the United States and Europe?
Open access
Date
2009-05Type
- Working Paper
ETH Bibliography
yes
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Abstract
In this paper, the amount of income redistribution in the United States, the European Union, and Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, Switzerland provides unique evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, a country that shares with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus face of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution. Show more
Permanent link
https://doi.org/10.3929/ethz-a-005799473Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
REGION OF THE EUROPEAN UNION; Income Mobility; Immigration; Religion; EINKOMMENSVERTEILUNG; INTERNATIONAL COMPARISONS (POINT OF VIEW); Political Economy; WOHLFAHRTSÖKONOMIK; POLITICAL ECONOMY; Openness; SCHWEIZ (MITTELEUROPA). SCHWEIZERISCHE EIDGENOSSENSCHAFT; SWITZERLAND (CENTRAL EUROPE). SWISS CONFEDERATION; POLITISCHE ÖKONOMIE; REGION DER EUROPÄISCHEN UNION; Redistribution; WELFARE ECONOMICS; VEREINIGTE STAATEN VON AMERIKA, USA (NORDAMERIKA); INTERNATIONALER VERGLEICH (GESICHTSPUNKT); Beliefs; INCOME DISTRIBUTION; UNITED STATES OF AMERICA, USA (NORTH AMERICA)Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
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ETH Bibliography
yes
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