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Income Inequality and Local Government in the United States, 1970-2000

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  • Leah Platt Boustan
  • Fernando Ferreira
  • Hernan Winkler
  • Eric Zolt

Abstract

The income distribution in many developed countries widened dramatically from 1970 to 2000. Scholars speculate that inequality contributes to a host of social ills by weakening the public sector. In contrast, we find that growing income inequality is associated with an expansion in revenues and expenditures on a wide range of services at the municipal and school district levels in the United States. These results are robust to a number of model specifications, including instrumental variables that deal with the endogeneity of local expenditures. Our results are inconsistent with models that predict heterogeneous societies provide lower levels of public goods.

Suggested Citation

  • 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.
    • Handle: RePEc:nbr:nberwo:16299
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    Cited by:

    1. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 95-130, March.
    2. Francesco Vona & Francesco Nicolli & Lionel Nesta, 2012. "Determinants of renewable energy innovation: environmental policies vs. market regulation," Sciences Po publications 2012-05, Sciences Po.
    3. Ruediger Bachmann & Jinhui Bai, 2013. "Politico-Economic Inequality and the Comovement of Government Purchases," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 565-580, October.
    4. Sidhakam BHATTACHARYYA & Gautam BANDYOPADHYAY, 2012. "Urban Local Bodies In India: Financial Control For Better Financial Performance," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 7(3), pages 24-37, August.
    5. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
    6. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
    7. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
    8. Ruediger Bachmann & Jinhui Bai, 2013. "Politico-Economic Inequality and the Comovement of Government Purchases," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 565-580, October.

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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