COMMUNITY MEMBERSHIP ASPIRATIONS: THE LINK BETWEEN
INEQUALITY AND REDISTRIBUTION REVISITED
International Economic Review, 46 (3):
973-1006 (August 2005)Abstract
This article studies how distributional tensions can act in many different
ways depending on the social affinity between the different economic
classes and their prospect of upward or downward mobility.We consider
that socioeconomic group membership through its implied social interactions
and peer effects is an important determinant of an individual’s
outcome. Agents, while voting on a social contract, take into account
the consequences of their choice over their ex post belonging to
a particular community. Thus, the endogenous sorting of the population
into clusters may lead to a nonmonotonic relationship between inequality
and the pressure for redistributive policies.
