The Conservative Government elected in Britain in 1979 wished to change the extent and pattern of government expenditure. We use econometric techniques to investigate whether it did so in the period up to 1984, concentrating attention on the welfare state. We also test the hypothesis that the observed changes favoured the middle classes. After discussing the channels by which the middle classes influence government policy, a model of government behaviour is outlined. The theoretical model indicates the forms of specification error that we might expect in our econometric results, which, in turn, suggest that the Conservatives tended to favour the middle classes, while the previous Labour administrations did not. However, the estimates for the Labour period appear to be misspecified, but those for the Conservative period survived tests of misspecification.
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