How to explain rising income and wealth inequality? We build an original heterogeneous-agent model with three key features: (i) an explicit link between firm's market power and top income shares, (ii) a granular representation of the tax and transfer system, and (iii) three assets with...

We study how regional shocks spill over across US local markets through intra-firm market networks and explore how such spillovers reshape household welfare across regions. We identify spillovers by linking data on barcode-region-level prices and quantities with producer-level information and by...

We examine the effects of government redistribution schemes in an economy where agents are subject to uninsurable, individual specific productivity risk. In particular, we consider the trade-off between positive insurance effects and negative distortions on labor supply. We parameterize the...

This paper analyzes the role of narrowly selfish and other-regarding preferences for the median voter in a Meltzer-Richard (1981) framework. We use computerized and real human co-players to distinguish between these sets of motivations. Redistribution to real co-players has a negative effect on...

Due to behavioral effects triggered by redistributional interventions, it is still an open question whether government policies are able to effectively reduce income inequality. We contribute to this research question by using different country-level data sources to study inequality trends in...

Within a simple setup, we show that proportional taxation is implied by three properties: efficiency, symmetry, and monotonicity. Efficiency: redistribution has no cost. Symmetry: members of the society with the same performance obtain the same reward after redistribution. Monotonicity: whenever...

This paper explores whether more generous social spending polices in fact lead to less income inequality, or if redistributive outcomes are offset by behavioral disincentive effects. To account for the inherent endogeneity of social policies with regard to inequality levels, I apply the System...

Local and state governments attempt to lessen after-tax income inequality via progressive taxation. Migration responses of capital and labor undermine such attempts. Location theory predicts that cross-state migration will continue until the redistributive effects from taxation are fully...

In well-functioning democracies, the policymaking process should in principle respond to persistent economic inequality with corrective policies. This process is set in motion through majority demands for redistributive taxation and spending that elected representatives eventually supply through...

Predominant views on the political economy of Latin America and the Caribbean tend to emphasize that elite domination helps to understand the high levels of inequality. The contemporary fiscal version of that assertion goes something like 'the rich are powerful and they dont like taxes, hence we...