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Redistributive Taxation and Personal Bankruptcy in U.S. States

  • Charles Grant
  • Winfried Koeniger

Personal bankruptcy regulation and redistributive taxes and transfers vary considerably across U.S. states and over time. Our hypothesis is that both policies are imperfect substitutes in insuring consumption of risk-averse agents in incomplete markets. Exploiting data variation over time for 18 U.S. states for the period 1980-2003, we find considerable support for this hypothesis: redistributive taxation and bankruptcy exemptions are negatively correlated, and both policies are associated with more equal consumption growth. (c) 2009 by The University of Chicago. All rights reserved.

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File URL: http://dx.doi.org/10.1086/591477
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Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 52 (2009)
Issue (Month): 3 (08)
Pages: 445-467

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Handle: RePEc:ucp:jlawec:v:52:y:2009:i:3:p:445-467
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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