Redistributive Public Employment
Politicians may use â€œdisguisedâ€ redistributive policies in order to circumvent opposition to explicit tax-transfer schemes. First, we present a theoretical model that formalizes this hypothesis. Next, we provide evidence consistent with the prediction of the model, namely that in U.S. cities, politicians use public employment as such a redistributive device. We find that city employment is significantly higher in cities where income inequality and ethnic fragmentation are higher.
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