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Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004

“I warn you that there are going to be howls of anguish from those rich enough to pay over 75% on their last slice of earnings”, a gleeful Denis Healey, Labour Party Shadow Chancellor, 1973.

“The justice for me is concentrated on lifting incomes of those that don’t have a decent income. It’s not my burning ambition to make sure that David Beckham earns less money”, Tony Blair, Labour Party Leader, 2001 Election Campaign.

Abstract

A main activity of the state is to redistribute resources. Standard political economy models predict that a rise in inequality will lead to more redistribution. This paper shows that, for the UK in the period 1983–2004, a plausibly exogenous rise in income inequality has not been associated with increased redistribution. We explore this example of the ‘paradox of redistribution’ using attitudinal data. We show that standard political economy models of the individual demand for redistribution do have explanatory power, but that other attitudes and beliefs are also very important. Moreover, these attitudes and beliefs change quite quickly so are very important in explaining variation in the demand for redistribution.

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Georgiadis, A., Manning, A. Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004. Public Choice 151, 537–563 (2012). https://doi.org/10.1007/s11127-010-9758-7

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  • DOI: https://doi.org/10.1007/s11127-010-9758-7

Keywords

  • Taxation
  • Inequality
  • Redistribution

JEL Classification

  • H20
  • D72