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Racism and Redistribution in the United States: A Solution to the Problem of American Exceptionalism

The two main political parties in the United States put forth policies on redistribution and on issues pertaining directly to race. We argue that redistributive politics in America can be fully understood only by taking account of the interconnection between these issues, and the effects of political competition upon the multi-dimensional party platforms. We identify two mechanisms through which racism among American voters decreases the degree of redistribution that would otherwise obtain. Many authors have suggested that voter racism decreases the degree of redistribution due to an anti-solidarity effect: that (some) voters oppose government transfer payments to minorities whom they view as undeserving. We point to a second effect as well: that some voters who desire redistribution nevertheless vote for the anti-redistributive party (the Republicans) because that party's position on the race issue is more consonant with their own, and this, too, decreases the degree of redistribution. We call this the policy bundle effect. The effect of voter racism on redistribution is the sum of these two effects. We propose a formal model of multi-dimensional political competition that enables us to estimate the magnitude of these two effects, and estimate the model for the period 1976-1992. We numerically compute that during this period voter racism reduced the income tax rate by 11-18 percentage points; the total effect decomposes about equally into the two sub-effects. We also find that the Democratic vote share is 5-38 percentage points lower than it would have been, absent racism.

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File URL: http://cowles.econ.yale.edu/P/cd/d14b/d1462.pdf
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Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1462.

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Length: 83 pages
Date of creation: Jun 2004
Date of revision:
Publication status: Published in Journal of Public Economics (2006), 90: 1027-1052
Handle: RePEc:cwl:cwldpp:1462
Note: CFP 1190.
Contact details of provider: Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/

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Order Information: Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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  1. Robert K. Triest, 1990. "The Effect of Income Taxation on Labor Supply in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 491-516.
  2. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," Working Papers 9902, Harris School of Public Policy Studies, University of Chicago.
  3. repec:cup:cbooks:9780521355643 is not listed on IDEAS
  4. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't The US Have a European-Style Welfare State?," Harvard Institute of Economic Research Working Papers 1933, Harvard - Institute of Economic Research.
  5. Edward L. Glaeser & Giacomo A. M. Ponzetto & Jesse M. Shapiro, 2004. "Strategic Extremism: Why Republicans and Democrats Divide on Religious Values," NBER Working Papers 10835, National Bureau of Economic Research, Inc.
  6. Woojin Lee & John E. Roemer, 2004. "Racism and Redistribution in the United States: A Solution to the Problem of American Exceptionalism," Cowles Foundation Discussion Papers 1462, Cowles Foundation for Research in Economics, Yale University.
  7. Thomas Piketty, 1994. "Social Mobility and Redistributive Politics," Working papers 94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. repec:cup:cbooks:9780521586115 is not listed on IDEAS
  9. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December.
  10. Jack High (ed.), 2001. "Competition," Books, Edward Elgar, number 1751, 6.
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