Uncertainty and the demand for redistribution in Hungary
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The main objective determinants of demand for redistribution are labour-market participation, education, family structure (to some extent), and income mobility. Demand from people of low education and living on the border between activity and inactivity - the unemployed, disability pensioners, casual workers, and people living on benefits - is higher than from others, irrespective of income level. Redistribution is favoured to a less than average extent by entrepreneurs, managers and chief executives. Long-term downwardly mobile people favour income redistribution more than others, but long-term upward mobility does not decrease demand and may even increase it. The authors analyse systematic differences between factual relative and subjective income mobility. This mobility perception difference shows that perceived, not actual relative income position is the strong determinant. Underestimation of relative income position can be an important cause of high demand. A very low proportion of people are strongly opposed to redistribution. Those dissatisfied are more favourably inclined. Labour-market expectations are crucial influences on demand; the greater the employment anxiety, the greater the support for redistribution. The same applies to belief that inequalities are increasing. The most frustrated are the indecisive, with no clear idea of their future, and they are the most averse to the rich. It emerges that perception of income mobility is state-dependent and influenced mostly by uncertainty. The main policy conclusion is that reducing uncertainty on the labour market and raising educational attainment may be the most efficient government tools for lowering demand for redistribution, rather than directly increasing income.
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