On the relative deservingness of capital and labor (with Vanessa Valero and Roberto A. Weber)

  • Datum:

    Nov 9th, 2022

  • Autoren:

    University of Zurich

  • Referent:

    Florian H. Schneider

  • Zeit:

    16:00 - 17:00

  • Abstract: Perceptions of deservingness play a critical role in support for redistributive policies. We investigate whether different inputs into production are perceived as differentially deserving of the rewards they jointly produce and whether such perceptions influence how people believe income should be awarded to the providers of such inputs. We focus on the special case of capital and labor inputs, a topic of long-standing interest in economics. We use pre-registered experiments with representative samples of the US and the Swiss populations to study perceptions of fairness in the allocation of rewards to investment and work. Our design holds constant many factors that may influence individuals’ preferences over such allocations in more natural environments. In the experiment, two participants provide separate inputs to production, either in the form of monetary investment or work effort; a different participant allocates the production rewards between the investor and the worker. We find substantial heterogeneity in perceived deservingness, but also observe a tendency to allocate a greater share to labor than to capital. Our measure of the tendency to favor one input over the other predicts attitudes and voting behavior in support of policies that differentially reward capital and labor. Overall, our findings indicate that people perceive different input factors as differentially deserving and that such fairness views directly impact policy preferences.