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Why Doesn't the United States Have a European-Style Welfare State?

  • Alberto Alesina

    (Harvard University)

  • Edward Glaeser

    (Harvard University)

  • Bruce Sacerdote

    (Dartmouth College)

European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.

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File URL: http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2001_2_bpea_papers/2001b_bpea_alesina.pdf
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Article provided by Economic Studies Program, The Brookings Institution in its journal Brookings Papers on Economic Activity.

Volume (Year): 32 (2001)
Issue (Month): 2 ()
Pages: 187-278

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Handle: RePEc:bin:bpeajo:v:32:y:2001:i:2001-2:p:187-278
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  1. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
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  12. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  13. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," Working Papers 9902, Harris School of Public Policy Studies, University of Chicago.
  14. Roland Benabou & Efe A. Ok, 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," NBER Working Papers 6795, National Bureau of Economic Research, Inc.
  15. Whaples, Robert, 1995. "Where Is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions," The Journal of Economic History, Cambridge University Press, vol. 55(01), pages 139-154, March.
  16. Clark Nardinelli & Curtis Simon, 1990. "Customer Racial Discrimination in the Market for Memorabilia: The Case of Baseball," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 575-595.
  17. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
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