Inequality of Opportunities and Preferences for Social Policies

The positive relationship between democracy and equalization of income predicted by the well-known Meltzer-Richard has been highly criticized on both theoretical and empirical grounds. In this paper, I analyze whether inequality of opportunities (rather than outcomes) is connected with preferences for social policies at the individual level. I focus specifically on the sources of current inequalities by decomposing individual outcomes into a fair share, which can be attributed to personal merit and effort, and surplus outcomes, which are the results of structural barriers in the labor markets or depend on inherited factors such as social background. To do that I rely on the methodological approach used by the growing economic literature on reference groups, in which individual income is the product of two components: the average income of the group and an idiosyncratic factor, which is the result of individual attributes. I use data from five waves of the European Social Survey in order to test these hypotheses. Empirical findings prove that occupational status and individual differences with respect to reference groups (especially those caused by inherited disadvantages) have a strong and significant impact on preferences for redistribution. In addition, educational inequality has a negative a significant effect over preferences for redistribution at the aggregate level.