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Wealth Distribution and the Provision of Public Goods: Evidence from the United States

  • Dietz Vollrath

    ()

    (Department of Economics, University of Houston)

This paper examines the role of inequality in the provision of public goods. County level data from the U.S. in 1890 provides comparable units of analysis operating with similar property tax systems, ensuring that we do not empirically confuse differences in tax systems with differences in public goods provision. Climatic data is used as an instrument for land inequality to provide identification of the effect of inequality. The results indicate that land inequality caused significantly lower overall property tax rates. This effect is driven almost exclusively by the effect of land inequality on taxes related directly to schooling. In contrast, non-school funding was not significantly affected by inequality. While informative about the effect of land inequality on public goods provision, an examination of the details of the tax system suggests that these results should not necessarily be taken as a rejection of median voter predictions.

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File URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2008-04.pdf
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Paper provided by Department of Economics, University of Houston in its series Working Papers with number 2008-04.

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Length: 42 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:hou:wpaper:2008-04
Contact details of provider: Postal: Houston TX 77023
Web page: http://www.uh.edu/class/economics/

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