Competition,income distribution,and the middle class: An experimental study

We study the effect of competition on income distribution by means of a two-stage experiment. heterogeneous endowments are earned in a contest,followed by a surplus-sharing task. the experimental test confirms our initial hypothesis that the existence of a middle class is as effective as institutional hurdles in limiting the power of the less able in order to protect the more able players from being expropriated. furthermore,majoritarian voting with a middle class involves fewer bargaining impasses than granting veto rights to the more able players and,therefore,is more efficient. © 2015 bernhard kittel et al.