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Effect of social capital on income distribution preferences: comparison of neighborhood externality between high- and low-income households

Yamamura, Eiji (2011): Effect of social capital on income distribution preferences: comparison of neighborhood externality between high- and low-income households.

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Abstract

This paper explores how individual preferences for income redistribution are influenced by social capital, which is measured by rates of participation in community activities. I combined individual-level data and place of residence data to examine how social capital accumulated in residential areas influences an individual’s preference for income redistribution. After controlling for individual characteristics, I obtained the following key findings: people are more likely to prefer income redistribution in areas with higher rates of community participation. This tendency is more clearly observed in high-income groups than in low-income groups. This implies that one’s preference for income redistribution is influenced by psychological externalities.

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