The influence of income inequality aversion on redistribution in a democratic context

摘要

This paper illuminates one mechanism by which democracy may fail to mitigate income inequality despite a widespread preference against it. When income inequality aversion is prevalent, high-skilled, higher-wage workers may adjust their working time to reduce inequality. However, the decrease in societal efficiency due to forgone high-skilled labor outweighs an increase in efficiency from lower-skilled workers. This implies that a pivotal worker may reject strong redistribution in favor of overall efficiency. Moreover, if the pivotal voter believes that a socially prevalent aversion already mitigates income inequality, a lower tax preference is further reinforced.