Social Identity, Redistribution, and Development

Yuki, Kazuhiro (2025): Social Identity, Redistribution, and Development.

Abstract

Empirical studies suggest that income redistribution promotes economic growth and development by reducing inequality and increasing educational investment among the poor. However, the scale of redistribution is limited in many developing countries. Why is the scale of redistribution small? This paper examines the role of social identity, whose importance in redistribution and development is supported in existing empirical research. Under what conditions does national identity emerge, and how does it influence the economic outcomes? To answer the questions, this paper develops a dynamic model of income redistribution and educational investment augmented with social identification and explores the interaction among identity, redistribution, and development theoretically. Specifically, it examines how two key drivers of development---endogenous human capital accumulation and exogenous, increasingly skill-biased technological change---shape identity, redistribution, and development.

• Item Type: MPRA Paper
• Language: English
• Keywords: social identity, redistribution, economic development, national identity, nation-building policies
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General

References

Aiyar, Shekhar and Christian Ebeke (2020), "Inequality of Opportunity, Inequality of Income, and Economic Growth," World Development 136,105115.

Akerlof, G. A. and R. E. Kranton (2000), "Economics and identity, " Quarterly Journal of Economics 115 (3): 715-53.

Ashok, Vivekinan, Ilyana Kuziemko, and Ebonya Washington (2016), "Support for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations," Brookings Papers on Economic Activity 2015 (1), 367-433.

Assouad, Lydia (2021), "Charismatic Leaders and Nation-Building", mimeo, Paris School of Economics.

Atkin, David, Eve Colson-Sihra, and Moses Shayo (2021), "How do we Choose our Indentity? A Revealed Preference Approach Using Food Consumption," Journal of Political Economy 129(4), 1193--1251.

Autor, David, Claudia Goldin, and Lawrence F. Katz (2020), "Extending the Race between Education and Technology," NBER Working Paper No. 26705.

Benabou, R. and J. Tirole (2011), "Identity, morals, and taboos: Beliefs as assets," Quarterly Journal of Economics 126 (2): 805-855.

Berg, Andrew, Jonathan D. Ostry, Charalambos G. Tsangarides, and Yorbol Yakhshilikov (2018), "Redistribution, inequality, and growth: new evidence," Journal of Economic Growth 23, 259-305.

Bernard, Mark, Florian Hett, and Mario Mechtel (2016), "Social identity and social free-riding," European Economic Review 90, 4--17.

Bisin, A., E. Patacchini, T. Verdier, and Y. Zenou (2011), "Formation and persistence of oppositional identities," European Economic Review 55 (8), 1046--1071.

Blofield, Merike, and Luna, Juan Pablo (2011) "Public Opinion on Income Inequalities in Latin America." In Blofield, Merike, ed., The Great Gap: Inequality and the Politics of Redistribution in Latin America. University Park, Pa.: Pennsylvania State University Press.

Blouin, Arthur and Sharun W. Mukand (2019), "Erasing ethnicity? Propaganda, nation building, and identity in Rwanda," Journal of Political Economy 127(3), 1008-1062.

Bonomi, Giampaolo, Nicola Gennaioli, and Guido Tabellini (2021), "Identity, Beliefs, and Political Conflict", Quarterly Journal of Economics 136(4), 2371--2411.

Cappelen, Alexander W., Benjamin Enke, and Bertil Tungodden (2025), "Universalism: Global Evidence," American Economic Review 115 (1): 43--76.

Carvalho, Jean-Paul and Christian Dippel (2020), "Elite Identity and Political Accountability: A Tale of Ten Islands," Economic Journal 130(631), 1995--2029.

Chen, Wei-Lin, Ming-Jen Lin, and Tzu-Ting Yang (2023), "Curriculum and National Identity: Evidence from the 1997 Curriculum Reform in Taiwan," Journal of Development Economics 163, 103078.

Chen, Y. and S. X. Li (2009), "Group identity and social preferences," American Economic Review 99 (1), 431--457.

Collier, P. (2009), Wars, Guns, and Votes. New York, NY: Harper Perennial.

Dehdari, Sirus H. and Kai Gehring (2021), "The Origins of Common Identity: Evidence from Alsace-Lorraine, " forthcoming in American Economic Journal: Applied Economics.

Deininger, Klaus and Lyn Squire (1998), "New ways of looking at old issues: Inequality and growth," Journal of Development Economics 57 (2), 259-287.

Deutsch, K. W. (1953), Nationalism and Social Communication: An Inquiry into the Foundations of Nationality. Cambridge, MA: MIT Press.

Dhami, Sanjit, Emma Manifold, and Ali al-Nowaihi (2021), "Identity and Redistribution: Theory and Evidence," Economica 88 (350), 499-531.

Easterly, William (2007), "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics 84 (2), 755-776.

Fouka, Vasiliki, Soumyajit Mazumder, and Marco Tabellini (2022), "From Immigrants to Americans: Race and Assimilation during the Great Migration," Review of Economic Studies 89 (2), 811-842.

Fukuyama, Francis (2018), "Why National Identity Matters," Journal of Democracy 29 (4), 5-15.

Galor, Oded and Joseph Zeira (1993), "Income distribution and macroeconomics," Review of Economic Studies 60, 35-52.

Gellner, E. (1983), Nations and Nationalism. Ithaca, NY: Cornell University Press.

Ghiglino, Christian, David Júarez-Lunam, and Andreas Müller (2021), "Class Altruism and Redistribution," Economic Journal 131(64), 3274-3295.

Goni, Edwin, J. Humberto Lopez, and Luis Serven (2011), "Fiscal Redistribution and Income Inequality in Latin America," World Development 39 (9), 1558-1569.

Grossman, G. and E. Helpman (2021) "Identity politics and trade policy," Review of Economic Studies 88 (3), 1101--1126.

Hanushek, Eric A. and Ludger Woessmann (2012a), "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth 17 267-321

Hanushek, Eric A. and Ludger Woessmann (2012b), "Schooling, educational achievement, and the Latin American growth puzzle," Journal of Development Economics 99, 497-512.

Hett, Florian, Mario Mechtel, and Markus Kröll (2020),"The Structure and Behavioral Effects of Revealed Social Identity Preferences," Economic Journal 130 (632), 2569--2595.

Holm, Joshua (2016), "A model of redistribution under social identification in heterogeneous federations," Journal of Public Economics 143, 39-48._{ }

Kenworthy, L. and L. McCall (2008), "Inequality, Public Opinion and Redistribution", Socio-Economic Review 6, 35--68.

Lindbeck, Assar and Weibull, Jörgen (1987), "Balanced-Budget Redistribution as the Outcome of Political Competition", Public Choice 52, 273--297.

Lindqvist, Erik and Robert Östling (2013), "Identity and redistribution," Public Choice 155, 469-491.

Litschig, Stephan and María Lombardi (2019), "Which tail matters? Inequality and growth in Brazil," Journal of Economic Growth 24 (2), 155-187.

Londoño-Vélez, Juliana (2022), "The impact of diversity on perceptions of income distribution and preferences for redistribution," Journal of Public Economics 214, 104732.

Manning, A., and S. Roy (2010), "Culture clash or culture club? National identity in Britain," Economic Journal 120: F72--F100.

Meltzer, Allan H. and Scott F. Richard (1981), "A Rational Theory of the Size of Government," Journal of Political Economy 89 (5), 914-927.

Michalopoulos, S. and E. Papaioannou (2015), "On the ethnic origins of African development: Chiefs and precolonial political centralization", Academy of Management Perspectives 29: 32-71.

Nosofsky, R. M. (1986), "Attention, similarity and the identification-categorization relationship," Journal of Experimental Psychology: General 115 (1): 39--57.

O'Donnell, Guillermo (1998) "Poverty and Inequality in Latin America: Some Political Reflections," in V. T. Tokman and G. O'Donnell (eds), Poverty and Inequality in Latin America. Issues and New Challenges, Notre Dame: Notre Dame University Press.

Robinson, A. L. (2014), "National versus ethnic identification in Africa: Modernization, colonial legacy, and the origins of territorial nationalism," World Politics 66, 709--746.

Sambanis, N. and M. Shayo (2013), "Social identification and ethnic conflict," American Political Science Review 107 (2): 294--325.

Schulte, Patrick (2021), "Skill Bias magnified: Identifying the role of international technology diffusion," Journal of International Economics 129, 103442.

Shayo, M. (2009), "A Model of social identity with an application to political economy: Nation, class and redistribution," American Political Science Review 103 (2): 147--74.

Singh, P. (2015), "Subnationalism and Social Development: A Comparative Analysis of Indian States," World Politics 67 (3), 506-62.

Tajfel, H. and J. C. Turner (1986), "The social identity theory of intergroup behavior." In S. Worchel and W. Austin eds., Psychology of Intergroup Relations, Chicago: Nelson Hall, 7--24.

Transue, J. E. (2007), "Identity salience, identity acceptance, and racial policy attitudes: American national identity as a uniting force," American Journal of Political Science 51, 78-91.

Turner, J. C., M. Hogg, P. Oakes, S. Reicher, and M. Wetherell (1987), Rediscovering the Social Group: A Self-Categorization Theory. Oxford: Blackwell.

Vilas, Carlos M. (1997), "Participation, Inequality, and the Whereabouts of Democracy", in Douglas A. Chalmers and others (eds), The New Politics of Inequality in Latin America: Rethinking Participation and Representation, Oxford: Oxford University Press.

Weber, E. (1979), Peasants into Frenchmen : The Modernization of Rural France, 1870-1914. Stanford, CA: Stanford University Press.

Windsteiger, Lisa (2022), "The redistributive consequences of segregation and misperceptions," European Economic Review 144, 104073.

Yuki, K. (2007), "Urbanization, informal sector, and development," Journal of Development Economics 84 (1), 76--103.

Yuki, K. (2008), "Sectoral shift, wealth distribution, and development," Macroeconomic Dynamics 12 (4), 527--559.

Yuki, K. (2021), "Modernization, social identity, and ethnic conflict," European Economic Review 140, 103919.