Title: Inequality, Relative Income, and Human Capital Investment
Abstract: Do investment responses to income transfers depend on the implied level of redistribution because of social comparisons? In a field experiment in 53 villages of an Amazonian foraging-farming society, we allocated substantial in-kind transfers, varied their associated degree of village income inequality, and measured the short-run eects on individual-level determinants of development. We find that the poorest households invested significantly less in human capital and engaged less with the labor market under an inequality-reducing treatment than under income-distribution neutrality. Our evidence suggests that inequality shapes the development process through social comparisons, and has implications for the eectiveness of transfer programs.
Publication Year: 2015
Publication Date: 2015-01-01
Language: en
Type: article
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Cited By Count: 1
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