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  Redistribution and Production with the Subsistence Income Constraint: a Real-Effort Experiment

Chugunova, M., Nicklisch, A., & Schnapp, K.-U. (2017). Redistribution and Production with the Subsistence Income Constraint: a Real-Effort Experiment. Working Paper / DFG-Research Group 2104, Nr. 2017-18.

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 Creators:
Chugunova, Marina1, Author              
Nicklisch, Andreas2, Author
Schnapp, Kai-Uwe2, Author
Affiliations:
1MPI for Innovation and Competition, Max Planck Society, ou_2035292              
2External Organizations, ou_persistent22              

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Free keywords: redistribution, subsistence income, implicit costs of taxa- tion, needy players, meaningfulness of taxation
 Abstract: A large body of literature demonstrates that redistribution leads to inefficiencies due to distorted work incentives. Yet, this result is obtained under the assumption that people are absolutely free in their labor-leisure allocation decisions and that taxation is merely a wage cut. We challenge this assumption and study labor supply decisions in a framework with the subsistence income constraint and a redistribution system which supports disadvantaged players. The results of the real-effort experiment show that the introduction of the moderate subsistence income requirement causes a substantial increase in productivity among taxpayers, with slight additional boost if tax returns are transferred to recipients and not wasted unproductively. As for recipients, the prospect of receiving a transfer significantly enhances their productivity and spurs the overall efficiency leading to a self-sorting of recipients according to their skills.

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Language(s): eng - English
 Dates: 2017-08-29
 Publication Status: Published online
 Pages: 32
 Publishing info: -
 Table of Contents: -
 Rev. Type: -
 Identifiers: -
 Degree: -

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Title: Working Paper / DFG-Research Group 2104
Source Genre: Series
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Publ. Info: -
Pages: - Volume / Issue: Nr. 2017-18 Sequence Number: - Start / End Page: - Identifier: -