The Effect of COVID-19 Exposure in Changing Voting Behavior
Segregation and Preferences for Redistribution
Joint with Andros Kourtellos
Submitted to the Bulletin of Economic Research
Abstract: This paper provides novel evidence of nonlinearities in the formation of preferences for redistribution by uncovering evidence of multiple regimes consistent with the presence of multiple equilibria and multiple steady states. Using threshold regressions that account for the endogeneity of the threshold variable, countries are classified into three groups that share common characteristics. Finally, our analysis reveals substantial evidence of parameter heterogeneity in the coefficient estimates of threshold regressions.
Joint with Andros Kourtellos
Journal of Economic Behavior and Organization (2022), 200, 716-737
Abstract: This paper investigates the role of social interactions on the preferences for redistribution using data from the 1972-2014 General Social Survey. Specifically, we study how lagged feedbacks from the behaviors of neighborhood affect the behavior of each individual. Our definition of a neighborhood is based on a socioeconomic network structure determined by location, race, religion, and education. We find that the preferences for redistribution of individuals depend on the preferences for redistribution of the neighborhood in which they lived when they were young adults. These lagged neighborhood effects are stronger for protestants and individuals with low parental education. We interpret our findings as evidence of the importance of social identity in shaping socioeconomic beliefs. Finally, we show that our results extend to range of other beliefs including politics, religion, and ethics.
Joint with Andros Kourtellos
Cyprus Economic Policy Review (2021), 15, 16-45
Abstract: The goal of this paper is to examine the recent trends and disparities in economic inequalities for Cyprus and draw comparisons with the other EU countries for the period 1995-2016. We provide new estimates of intergenerational mobility of education, study the relationship between mobility and income inequality, and investigate trends and inequalities in a range of macro-level and micro-level indicators. Our findings show that Cyprus is characterized by a relatively high degree of educational intergenerational persistence and moderate levels of income inequality. Recent trends in income inequality show a spike in top income inequality due to the recent economic crisis. We also find that Cyprus follows similar patterns as the EU average but generally lags behind the Nordic countries, especially for social protection benefits and educational outcomes. Finally, our findings show that the relative female labor force participation in Cyprus is similar to the EU average with small negative deviations from the average value for men’s returns to skills and moderate positive deviations for assortative mating. Notably, Cyprus enjoys the second smallest percentage of single-headed households in the EU.
Joint with Andros Kourtellos and Alex Lenkoski
Journal of Empirical Economics (2020), 59, 2185-2222
Abstract: This paper investigates the role of model uncertainty in explaining the different findings in the literature regarding the determinants of government expenditure and its components. In particular, we systematically assess the evidentiary support for nine different theories using a novel model averaging method that allows for endogeneity. Our results suggest that the government size and its components are explained by multiple mechanisms that work simultaneously but differ in their impact and importance. Hence, policymakers should avoid relying on any particular model to make policy decisions. More precisely, for general government total expenditure we find decisive evidence for the demography theory and a strong evidence for the globalization and political institution theory. In the case of central government total expenditure, we find that income inequality and macroeconomic policy play a decisive role in addition to demography.
Joint with Andros Kourtellos
Cyprus Economic Policy Review (2017), 11, 41-68
Abstract: This paper investigates the determinants of the preferences of redistribution in Cyprus using two complementary surveys, the European Social Survey and the World Values Survey. We find that current individual income and perceptions about fairness play a major role in determining the preferences for redistribution in Cyprus even when we account for model uncertainty. Both income and perceptions about fairness are negatively associated with demand for redistribution. From the perspective of policy evaluation our results can have important consequences on government size, inequality, intergenerational mobility, and even long-run growth in Cyprus. The substantial reductions in individual income and perceptions about fairness during the recent economic crisis in Cyprus are expected to generate a higher demand for redistribution. Thus, policy makers will face the challenge to revise the mix of progressive and regressive taxation in Cyprus in the coming years in order to reduce the mismatch between preferences and actual policy outcomes.