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Recent evidence of increasing income heterogeneity within developed countries has reignited debates concerning the redistribution of income and wealth. In this article, we contribute to this debate by assessing the role of individuals'jurisdictional identi…cation for their preferences towards intra-federation redistributive …nancial ‡ows. Incorporating insights from social identity theory in a model of redistributive taxation, we show that federal, rather than local, identi…cation can lead individuals to shift their redistribution preferences independent of their narrowly-de…ned personal economic interests. Moreover, contrary to conventional wisdom, welfare state support will sometimes be decreasing in national identi…cation. We empirically assess these predictions using individual-level data from the 2008 German General Social Survey (ALLBUS) and a 2013-2014 survey among Belgian local politicians. Our …ndings provide strong support for the model's core predictions in both settings.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Theoretical work based on social identity theory and in-group favoritism predicts that increased population diversity (e.g., due to immigration) reduces support for redistributive public policies. In this article, we add to the empirical literature testing this prediction in three ways. First, rather than ethno-linguistic or racial heterogeneity, we analyze religious diversity, which in many countries is an increasingly important source of diversity. Second, to account for the potential endogeneity of heterogeneity, we analyze an exogenous shock in diversity due to the German reunification. Finally, we assess shifts in local individuals' social identification after immigration took place, which, while untested in previous contributions, is a critical theoretical mechanism. Our results -using tax and spending decisions of 2031 Bavarian municipalities over the 1983-2005 period -indicate that Catholic municipalities in particular significantly reduced their level of taxes and spending in response to non-Catholic immigration. These effects arise only after the first post-reunification local elections, suggesting a critical mediating role of the democratic process. Terms of use: Documents inKeywords: local identity, fiscal policy, redistribution, German reunification, diff-in-diff estimation JEL classification: H10, H11, H77 * Corresponding author: Benny Geys, Norwegian Business School BI, Nydalsveien 37, 0484 Oslo, Tel.: +47 46410923, Email: Benny.Geys@bi.no. We are grateful to Zareh Asatryan, Friedrich Heinemann, Kai Konrad, Ronnie Schöb, Marcel Thum and seminar participants at Vrije Universiteit Brussel (VUB) and the WZB Berlin for insightful comments on a previous version. The usual disclaimer applies.

This study reflects upon differences in generalized trust levels among active participants of voluntary organizations with varying levels of ethnic diversity. Based on the Family Survey of the Dutch Population 2009, we find that (a) average trust levels are highest among participants of ethnically diverse organizations; (b) On average, length of participation is unrelated to trust, and (c) ethnic diversity does not positively moderate this relationship; (d) Level of trust is considerably higher among recent joiners (0-2 years) of highly-diverse organizations (26%+ minority membership), than among recent joiners of (more) homogeneous organizations, strongly implying that those with higher trust select into diverse organizations. However, (e) we see a substantially lower level of trust among members of highly-diverse organizations (26%+ minority) when comparing mid-term duration of participation (3-10 years) with short-term duration of participation (0-2 years) and again a higher level of trust when participation duration is 11 years or more. Trust scores, thus, converge across different diversity levels at longer duration of participation.