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Journal Article

The redistributive consequences of segregation and misperceptions

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Windsteiger,  Lisa
Public Economics, MPI for Tax Law and Public Finance, Max Planck Society;

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Citation

Windsteiger, L. (2022). The redistributive consequences of segregation and misperceptions. European Economic Review, 144: 104073. doi:10.1016/j.euroecorev.2022.104073.


Cite as: https://hdl.handle.net/21.11116/0000-000A-E034-E
Abstract
In this paper I present a model in which an increase in income inequality can lead to a decrease in voters’ demand for redistribution. In my model, people sort into groups according to income and as a result they become biased about the shape of the income distribution. I demonstrate that an increase in inequality can lead to a decrease in perceived inequality in the presence of segregation, and hence to a fall in people’s support for redistribution.