Social mobility and the demand for redistribution: The POUM hypothesis

Roland Benabou, Efe A. Ok

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they, or their offspring, may make it up the income ladder. This "prospect of upward mobility" (POUM) hypothesis is shown to be fully compatible with rational expectations, and fundamentally linked to concavity in the mobility process. A steady-state majority could even be simultaneously poorer than average in terms of current income, and richer than average in terms of expected future incomes. A first empirical assessment suggests, on the other hand, that in recent U. S. data the POUM effect is probably dominated by the demand for social insurance.

    Original languageEnglish (US)
    Pages (from-to)447-487
    Number of pages41
    JournalQuarterly Journal of Economics
    Volume116
    Issue number2
    DOIs
    StatePublished - May 2001

    ASJC Scopus subject areas

    • Economics and Econometrics

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