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Fair and Unfair Income Inequality

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Handbook of Labor, Human Resources and Population Economics

Abstract

This chapter reviews the experimental research on fairness and income inequality. It first provides a brief overview of the normative literature that has inspired the growing experimental literature on fairness and distributive behavior, and then proceeds to outline a theoretical framework for interpreting the experimental evidence. The experimental literature has shown two important heterogeneities in people’s fairness preferences; people differ in the weight they attach to fairness and in what they perceive as fair and unfair inequalities. In the study of the pluralism of fairness views, the experimental literature has largely focused on whether people are strict egalitarian, meritocratic, or libertarian in their fairness view. The chapter also discusses experimental research on the origins of fairness preferences, focusing on studies of how fairness preferences develop in childhood and adolescence and on how fairness preferences are shaped by the social environment. The chapter ends with a discussion of some implications of incorporating fairness preferences for the study of labor markets, bargaining, and redistribution.

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Acknowledgements

Funding was provided by the European Research Council, FAIR project No. 788443, and the Research Council of Norway through its Centres of Excellence Scheme, FAIR project No. 262675.

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Cappelen, A.W., Falch, R., Tungodden, B. (2020). Fair and Unfair Income Inequality. In: Zimmermann, K. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_130-1

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