Joint with Andros Kourtellos
Accepted 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 classied into three groups that share common characteristics. Finally, our analysis reveals substantial evidence of parameter heterogeneity in the coecient 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 influences in preferences for redistribution using data from the General Social Survey. We employ social interaction models with a socioeconomic network structure and intertemporal feedbacks during the impressionable years. We find substantial evidence of both lagged endogenous and contextual effects that imply that the redistributive preferences are intertemporally dependent. Interestingly, controlling for individual income, the contextual effect of income is negative and strongly significant. Our results highlight the key role of fathers’ education in the structure of the social network. We interpret our findings as suggestive evidence that social identity can explain attitudes towards redistribution. We also uncover evidence of threshold effects in preferences for redistribution that are consistent with the predictions of theoretical models that exhibit multiple equilibria. Finally, we show that our results extend to a range of other attitudes and 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
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.