TY  - RPRT
        AU  - Kölle, Felix
AU  - Sliwka, Dirk
AU  - Zhou, Nannan
        TI  - Inequality, Inequity Aversion, and the Provision of Public Goods
        PY  - 2011/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5514
        UR  - https://www.iza.org/index.php/publications/dp5514
        AB  - We investigate the effects of inequality in wealth on the incentives to contribute to a public good when agents are inequity averse and may differ in ability. We show that equality may lead to a reduction of public good provision below levels generated by purely selfish agents. But introducing inequality motivates more productive agents to exert higher efforts and help the group to coordinate on equilibria with less free-riding. As a result, less able agents may benefit from initially disadvantageous inequality. Moreover, the more inequity averse the agents, the more inequality should be imposed even by an egalitarian social planner.
        KW  - public goods
KW  - inequality
KW  - inequity aversion
KW  - social welfare
KW  - voluntary provision
KW  - income distribution
KW  - heterogeneity
        ER  -