Essays on Social Policy and Preferences for Redistribution

This dissertation is composed of two essays. The first chapter "The Impact of Government Programs on Individual Preferences for Redistribution: Evidence from SCHIP/Medicaid expansion" investigates the effects of government's transfer programs on individual's preferences for redistribution. Using the restricted file of the General Social Survey from 1996 to 2014, I study the impact of a large public insurance program targeting children on their parents' support for government's redistribution. To account for the endogeneity of program eligibility, I adopt an instrumental variable approach that exploits state-level variation in children's age groups and income thresholds for program eligibility to simulate individual household's exposure to the policy. I find strong evidence suggesting that having a child eligible for the program has a positive and significant impact on parents' support for redistribution, by around 25% of the variable's standard deviation. It is possibly mediated through the channel of increasing individual's trust in the government. The result is robust to alternate specifications and different measures of support for redistribution.

The second chapter "The Effects of Relative Income on Preferences for Redistribution" investigates whether individuals' position on the income distribution, i.e their relative income, affects their preferences for redistribution. Specifically, using cross-state variations from the US General Social Survey (GSS), augmented with cross-country variations from the World Values Survey (WVS), I examine whether the individuals' preferences for redistribution change once they become relatively rich compared to their peers. Controlling for the level of income, I look at the effects of peer group's relative income, using the practice of measuring individual preferences for redistribution from the literature. Consistent with previous studies, I find relative income to have an effect on individual's happiness. I also find evidence that relative income affect individual's attitudes towards income inequality and support for redistribution. An increase in individuals' relative income results in less support for redistributive policies: those with higher income compared to their peer group are less favorable of government reducing income differences, less in support of government aid and less in favor of other redistributive policies. The results are consistent using both data from the US and other countries, and robust to different fuctional forms, and measures of relative income.