Social mobility and the demand for redistribution: The POUM hypothesis

This paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they, or their offspring , may make it up the income ladder. This "prospect of upward mobility" (POU M) hypothesis is shown to be fully compatible with rational expectations, a nd fundamentally linked to concavity in the mobility process. A steady-stat e majority could even be simultaneously poorer than average in terms of cur rent income, and richer than average in terms of expected future incomes. A first empirical assessment suggests, on the other hand, that in recent U. S. data the POUM effect is probably dominated by the demand for social insu rance.