IZA DP No. 430: Are People Inequality Averse, and Do They Prefer Redistribution by the State? Evidence From German Longitudinal Data on Life Satisfaction
published in: Journal of Socio-Economics, 2007, 36 (2), 233 - 249
We link life-satisfaction data to inequality of the pre-government income distribution at the
regional level, to estimate the degree of inequality aversion. In addition, we investigate
whether a reduction in inequality by the state increases individual well-being. We find that
Germans are inequality averse over the entire income distribution. However, inequality
reduction by the state does not increase well-being. On the contrary, inequality reduction
places something of an excess burden on middle-income earners. The paper uses data from
the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.
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