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The Efficacy of State and Local Governments' Redistributional Policies

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  • Kathy Hayes

    (Southern Methodist University)

  • Daniel J. Slottje

    (Southern Methodist University)

Abstract

This article examines the relative effectiveness of the redistributive efforts of state and local governments. Specifically, we examine whether these efforts have affected both income inequality within a state and income inequality within racial groups as well as in urban/rural populations across states. To do this, we use a recently developed statistical model of comprehensive inequality to analyze the size distribution of income in the United States for the fifty states for the years 1970 and 1980. We proceed by examining the relationships of these income inequality measures to state and local tax progressivity, state and local government expenditures on education and welfare, federal tax burden, and federal expenditures. We find that states with more progressive sales and personal income taxes tend to have more inequality, while the overall state/local tax progressivity appears to contribute to reducing inequality.

Suggested Citation

  • Kathy Hayes & Daniel J. Slottje, 1989. "The Efficacy of State and Local Governments' Redistributional Policies," Public Finance Review, , vol. 17(3), pages 304-322, July.
    • Handle: RePEc:sae:pubfin:v:17:y:1989:i:3:p:304-322
    DOI: 10.1177/109114218901700304
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    References listed on IDEAS

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    1. James B. McDonald, 2008. "Some Generalized Functions for the Size Distribution of Income," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Duangkamon Chotikapanich (ed.), Modeling Income Distributions and Lorenz Curves, chapter 3, pages 37-55, Springer.
    2. Suits, Daniel B, 1977. "Measurement of Tax Progressivity," American Economic Review, American Economic Association, vol. 67(4), pages 747-752, September.
    3. McDonald, James B & Ransom, Michael R, 1979. "Functional Forms, Estimation Techniques and the Distribution of Income," Econometrica, Econometric Society, vol. 47(6), pages 1513-1525, November.
    4. Champernowne, D G, 1974. "A Comparison of Measures of Inequality of Income Distribution," Economic Journal, Royal Economic Society, vol. 84(336), pages 787-816, December.
    5. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
    6. Slottje, D J, 1987. "Relative Price Changes and Inequality in the Size Distribution of Various Components of Income: A Multidemensional Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(1), pages 19-26, January.
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    Cited by:

    1. Leah Platt Boustan & Fernando Ferreira & Hernan Winkler & Eric Zolt, 2010. "Income Inequality and Local Government in the United States, 1970-2000," NBER Working Papers 16299, National Bureau of Economic Research, Inc.
    2. Jason M. Fletcher & Matthew N. Murray, 2008. "What Factors Influence the Structure of the State Income Tax?," Public Finance Review, , vol. 36(4), pages 475-496, July.
    3. Robert A. Collinge, 1994. "Transferable Rate Entitlements: the Overlooked Opportunity in Municipal Water Pricing," Public Finance Review, , vol. 22(1), pages 46-64, January.

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