Market luck: skill-biased inequality and redistributive preferences

Abstract

Market forces beyond individual control are a central driver of income inequality, a phenomenon we refer to as market luck. In meritocratic societies, this raises the question of whether individuals perceive such inequalities as fair. To address this question, we conduct experiments in the US, France, and China in which inequality between workers emerges due to random matching with buyers who require specific skills, creating inequality driven by market luck. Our findings from the US indicate that individuals are more accepting of ine Show more