Marina Chugunova, Andreas Nicklisch, Kai-Uwe Schnapp

Redistribution and Production with a Subsistence Income Constraint: A Real-effort Experiment

Section: Articles
FinanzArchiv (FA)

Volume 78 () / Issue 1-2, pp. 208-238 (31)
Published 20.12.2021

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A large body of experimental studies demonstrates that redistribution leads to inefficiencies due to distorted work incentives. Yet, this finding is typically obtained in environments where people are unconstrained in their labor-leisure allocation decisions. In this paper we study labor supply decisions in a framework with a subsistence income constraint and a redistribution system that supports disadvantaged members of a society in meeting the constraint. We document that while high-talent taxpayers perform equally well in all conditions, the less talented ones significantly decrease their performance in response to the introduction of the tax. The negative effect of taxation is mitigated if an income threshold is present and the tax is spent meaningfully.

Marina Chugunova No current data available.

Andreas Nicklisch geb. 1975, Wissenschaftlicher Referent am Max-Planck-Institut zur Erforschung von Gemeinschaftsgütern; Studium der Volkswirtschaftslehre und der altsemitischen Philologie in Jena und Brisbane; 2005 Promotion zum Dr. res. pol. an der Universität Jena

Kai-Uwe Schnapp No current data available.