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Political Choice, Public Policy, and Distributional Outcomes

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  • Nathan J. Kelly

Abstract

I address the functioning of the U.S. governing system by analyzing distributional outcomes from 1947 to 2000. The key question is whether public policy influences distributional outcomes. The macropolitics model and power resource theory suggest that left policies should equalize the distribution of income. I utilize single equation error correction models to assess the impact of policy on income inequality through two mechanisms—market conditioning and redistribution. Since nearly every government action influences markets in some way, I examine policy in the aggregate rather than focusing only on policies explicitly designed to redistribute income. The analysis indicates that policy influences inequality through both mechanisms, with left policy producing more equality. The results are consistent with power resource theory and strongly support the macropolitics model. Furthermore, I find that market conditioning is as important as, and works in tandem with, explicit redistribution.

Suggested Citation

  • Nathan J. Kelly, 2005. "Political Choice, Public Policy, and Distributional Outcomes," American Journal of Political Science, John Wiley & Sons, vol. 49(4), pages 865-880, October.
    • Handle: RePEc:wly:amposc:v:49:y:2005:i:4:p:865-880
    DOI: 10.1111/j.1540-5907.2005.00160.x
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    1. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    2. George J. Borjas & Richard B. Freeman, 1992. "Immigration and the Work Force: Economic Consequences for the United States and Source Areas," NBER Books, National Bureau of Economic Research, Inc, number borj92-1, July.
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    Cited by:

    1. David Brady & Amie Bostic, 2014. "Paradoxes of social policy: Welfare transfers, relative poverty and redistribution preferences," LIS Working papers 624, LIS Cross-National Data Center in Luxembourg.
    2. Jamila Michener, 2023. "Legal Aid and Social Policy: Managing a Political Economy of Scarcity," The ANNALS of the American Academy of Political and Social Science, , vol. 706(1), pages 137-158, March.
    3. Tyler Johnson & David Rossbach, 2015. "Foreign Affairs, Domestic Attention: Explaining American Media Coverage of the European Financial Crisis," Social Science Quarterly, Southwestern Social Science Association, vol. 96(5), pages 1328-1347, November.
    4. Ali Kagalwala & Andrew Q. Philips & Guy D. Whitten, 2021. "What About the Rest of the Pie? A Dynamic Compositional Approach to Modeling Inequality," Social Science Quarterly, Southwestern Social Science Association, vol. 102(4), pages 1534-1552, July.
    5. Matthew E.K. Hall, 2017. "Macro Implementation: Testing the Causal Paths from U.S. Macro Policy to Federal Incarceration," American Journal of Political Science, John Wiley & Sons, vol. 61(2), pages 438-455, April.
    6. Steven Deller & Craig Maher & Judith Stallmann, 2021. "Do tax and expenditure limitations exacerbate rising income inequality?," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 611-643, November.
    7. Huo, Jingjing, 2015. "How Nations Innovate: The Political Economy of Technological Innovation in Affluent Capitalist Economies," OUP Catalogue, Oxford University Press, number 9780198735847.

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