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Income inequality and the growth of redistributive spending in the United States (US) states: is there a link?

Published online by Cambridge University Press:  29 August 2017

Tima T. Moldogaziev ,
James E. Monogan  and
Christopher Witko
Tima T. Moldogaziev
Affiliation:
Department of Public Administration and Policy, University of Georgia, USA E-mail: timatm@uga.edu
James E. Monogan
Affiliation:
Department of Political Science, University of Georgia, USA E-mail: monogan@uga.edu
Christopher Witko
Affiliation:
Department of Political Science, University of South Carolina, USA E-mail: WitkoC@mailbox.sc.edu
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Abstract

Prominent public policy models have hypothesised that rising income inequality will lead to more redistributive spending. Subsequent theoretical advancements and empirical research often failed to find a positive relationship between inequality and redistributive spending, however. Over the last few decades both income inequality and redistributive spending have been growing in the United States states. In this work, we consider whether temporal variation in inequality can explain variation in redistributive spending, while controlling for a number of factors that covary with redistributive spending in the states. In an analysis of data for 1976–2008, we find that higher levels of inequality are associated with greater redistributive spending, offering empirical evidence that fiscal policy at the state level responds to growing levels of income inequality. Considering the growing role of state governments in welfare provision during the past several decades, this finding is relevant for policy researchers and practitioners at all levels of government.

Keywords

fiscal policyincome inequalityredistributive spendingstate expenditure
Type
Research Article
Information
Journal of Public Policy , Volume 38 , Issue 2 , June 2018 , pp. 141 - 163
Copyright
© Cambridge University Press, 2017 

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