Marchesi, D., Nikolova, M., & Angelini, V. (2024). Gini Who? The Relationship Between Inequality Perceptions and Life Satisfaction. IZA-Institute of Labor Economics. (Revise and Resubmit at the Journal of Economic Inequality)
Flat and Back Again: Individuals’ Response to Radical Tax Reforms
Abstract: Personal income tax reforms are highly visible and directly affect people’s disposable income and its distribution. A radical change, such as the introduction or abolition of a flat tax, which applies a single, uniform tax rate to all income levels, has both macroeconomic and behavioral consequences. Little is known, however, about its effect on individuals’ views and attitudes, which can determine economic choices and policy acceptance. This paper takes four case studies to investigate the impact of a radical tax reform on individuals’ expectations regarding their personal lives, household financial situations, and national economic and employment prospects. These cases include the introduction of a flat tax in Bulgaria and Hungary, and its abolition in Latvia and Lithuania. Using quarterly Eurobarometer survey data from 2001 to 2023, the study employs a difference-in-differences econometric framework that compares treated countries to a comparison group of countries with similar characteristics and stable tax regimes. I conduct the analysis separately for each treated country, over country-specific windows that span the 10 quarters before and after each reform. The results reveal that flat tax reforms can significantly shape economic expectations, with effects varying by country and political context. These changes reflect not only income-related factors but also ideological and fairness considerations, highlighting the need for policymakers to account for diverse mechanisms influencing public perceptions when designing tax policies.
Early-Life Adversity and Preferences for Redistribution: A Global Perspective (with V. Angelini, M. Nikolova, and O. Popova)
Abstract: Understanding how attitudes toward inequality form is central to debates on redistribution and social policy, yet the influence of early-life adversity on these attitudes remains largely unexplored, particularly outside high-income contexts. This paper examines how adverse childhood experiences (ACEs) influence adult preferences for income redistribution, using data from the Global Flourishing Study, a new, large-scale, longitudinal survey of over 200,000 individuals from 22 countries worldwide. We construct measures of ACEs from retrospective questions on parental relationships, abuse, health, and household finances while growing up, and document marked cross-country variation in both ACE prevalence and redistributive preferences between HICs and LMICs. We then explore three mechanisms linking early adversity to redistribution: material self-interest, altruistic behaviors, and trust. The results show that exposure to ACEs is associated with stronger support for redistribution only in HICs but not in LMICs, suggesting that early-life adversity shapes economic and political attitudes in ways that depend on broader institutional and cultural contexts.
How perceived inequality shapes well-being (May 21, 2024), IZA World of Labor (with M. Nikolova and V. Angelini)
Ervaren ongelijkheid (December 13, 2024), ESB Kort Uitgelicht