The Journal of Economic Inequality

, Volume 9, Issue 1, pp 1–21

Does philanthropy reduce inequality?

Article

Abstract

Wealthy individuals often voluntarily provide public goods that the poor also consume. We show that, rather than reducing it, such philanthropy may aggravate absolute inequality in welfare achievement, while leaving the change in relative inequality ambiguous. Additionally, philanthropic preferences may increase the effectiveness of policies to redistribute income, instead of weakening them. Our results thus suggest that philanthropy and direct redistribution may often be better viewed as complements, rather than substitutes, in the context of inequality reduction. In so doing, they also bring into question the general normative case for large tax deductions for charitable contributions.

Keywords

Community Public goods Inequality Distribution Philanthropy 

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Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.Department of EconomicsDurham UniversityDurhamUK
  2. 2.Cornell UniversityIthacaUSA

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