Adapting or compounding? The effects of recurring labour shocks on stated and revealed preferences for redistribution

Maria Cotofan and Konstantinos Matakos

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The evidence on the impact of employment shocks on preferences for redistribution is mixed on stated outcomes and sparse on revealed ones. We conduct a survey of US workers to measure the impact of repeated labour market shocks on both stated and revealed redistributive preferences. We measure the former by support on seven different policies and the latter through donations. We look at experiences of both mild shocks (having to reduce working hours) and hard shocks (unemployment), as well as past unemployment during formative years. We find evidence of adaptation to unemployment on policy preferences and compounding for milder shocks on donations, suggesting that the effects of repeated shocks on preferences for redistribution are not independent. Our results show that unemployment impacts preferences in a self-interested way, while milder shocks lead to broader support for redistribution.

Keywords: labour market shocks; scarring; redistribution; donations (search for similar items in EconPapers)
Date: 2023-11-10
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