@misc{BjornskovDreherFischeretal., author = {Bj{\o}rnskov, Christian and Dreher, Axel and Fischer, Justina and Schnellenbach, Jan and Gehring, Kai}, title = {Inequality and Happiness: When Perceived Social Mobility and Economic Reality Do Not Match}, series = {Journal of Economic Behavior \& Organization}, volume = {91}, journal = {Journal of Economic Behavior \& Organization}, issn = {0167-2681}, doi = {10.1016/j.jebo.2013.03.017}, pages = {75 -- 92}, abstract = {We argue that perceived fairness of the income generation process affects the association between income inequality and subjective well-being, and that there are systematic differences in this regard between countries that are characterized by a high or, respectively, low level of actual fairness. Using a simple model of individual labor market participation under uncertainty, we predict that high levels of perceived fairness cause higher levels of individual welfare, and lower support for income redistribution. Income inequality is predicted to have a more favorable impact on subjective well-being for individuals with high fairness perceptions. This relationship is predicted to be stronger in societies that are characterized by low actual fairness. Using data on subjective well-being and a broad set of fairness measures from a pseudo micro-panel from the WVS over the 1990-2008 period, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the predicted differences in individual tolerance for income inequality, and the predicted influence of actual fairness.}, language = {en} } @misc{Schwuchow, author = {Schwuchow, S{\"o}ren C.}, title = {Military Spending and Inequality in Autocracies: A Simple Model}, series = {Peace Economics, Peace Science and Public Policy}, volume = {24}, journal = {Peace Economics, Peace Science and Public Policy}, number = {4}, issn = {1554-8597}, doi = {10.1515/peps-2018-0025}, pages = {5}, abstract = {In this note, we outline a general framework for analyzing how inequality and military spending interact in a society governed by a rent-seeking autocrat. Relying on a general equilibrium model, we show that, generally, the autocrat utilizes the military for redistribution in favor of poorer citizens. However, the dictator's own rent-seeking activity weakens the extent of redistribution and, in the extreme, can even reverse its direction, yielding more unequal secondary distributions instead. Accordingly, the initial level of inequality also affects the impact of military spending on inequality as the former has an impact on the extent of both, the regime's rent-seeking activity as well as redistribution. Here, our model shows that primary and secondary distributions are rather equal for extreme initial equality/inequality. For medium levels of initial inequality, redistribution is rather large and can be in favor of the poor or of the rich, depending on the extent of rent-seeking and the primary distribution. Based on these results, we highlight the importance of a society's institutional framework for analyzing the relation of inequality and military spending.}, language = {en} } @misc{Schwuchow, author = {Schwuchow, S{\"o}ren C.}, title = {Organized crime as a link between inequality and corruption}, series = {European Journal of Law and Economics}, volume = {55}, journal = {European Journal of Law and Economics}, number = {3}, issn = {0929-1261}, doi = {10.1007/s10657-023-09764-x}, pages = {469 -- 509}, abstract = {We study a model that establishes a novel theoretical rationale for the empirically well-documented relation between inequality and corruption. According to our model, inequality can nurture corruption by empowering organized crime because collusion between local police forces and criminal organizations is more likely in societies characterized by high inequality or weak security forces. Law enforcement and organized crime have a strong incentive to collude due to efficiency gains from specialization. However, their agreement breaks down when the mobsters can no longer credibly commit to joint rent maximization and thus start to compete with law enforcement for citizens' wealth. The mobsters then non-violently monopolize the market for extortion by undercutting the police forces, similar to a strategy of predatory pricing. Criminal collusion is thus not very different from its corporate equivalent; hence, similar policy measures should be promising. In addition, our model also suggests that the criminal organization's higher efficiency in extracting rents has a greater impact when the relative power between law enforcement and organized crime is rather balanced. Accordingly, when violent conflict becomes less predictable, non-violent elements of relative power become more relevant. Our model also allows for the interpretation that in the absence of strong social norms against corruption, organized crime is more difficult to challenge.}, language = {en} }