CeDEx Seminar - Vanessa Valero (Institut Mines-Télécom Business School)

On the Relative Deservingness of Capital and Labor

We investigate whether different inputs are perceived as differentially deserving of their returns to production, focusing on capital and labor, and how such perceptions influence support and voting for redistributive policies. Using pre-registered experiments with representative samples in two countries, we study perceptions of deservingness in the allocation of production rewards to investment and work using a design that holds constant many factors that may justify differentially rewarding inputs in more natural environments. Paired participants either provide work effort or money toward joint production. A third participant allocates the production rewards between the input providers. We find a slight tendency to perceive work as more deserving than investment, but also substantial heterogeneity. The observed choices correlate strongly with attitudes and voting in support of policies that differentially reward capital and labor. Finally, we demonstrate the independent roles of fairness perceptions and other economic and social considerations in voters’ support for a real-world policy with distributional consequences.