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The literature shows that when a society believes that wealth is determined by random "luck" rather than by merit, it demands more redistribution. Adverse shocks, like earthquakes, strengthen the belief that random "bad luck" can frustrate the outcomes achieved with merit. We theoretically...
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-cycle model, we determine that taxes and transfers offset 45% of lifetime earnings inequality attributed to differences in … productive abilities and education. Additionally, the system insures against 48% of lifetime earnings risk. Implementing a …
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