Freedom and Redistribution

Abstract

In this paper we study the determinants of peopleís attitudes toward income inequality and their economic consequences. We argue that an individualís atti- tudes toward inequality depend upon the extent of freedom of choice and control over life outcomes he enjoys. We construct a two-stage empirical model where people Örst choose the level of income transfers and then their optimal level of ef- fort. We Önd that the higher the extent of an individualís free choice and control over life outcomes, the greater the probability that he supports larger income di§erences as incentives for individual e§ort. We also show that this relationship determines important consequences for the individualís willingness to work.