Political economy of redistribution in the united states in the aftermath of world war II-evidence and theory

Roel Beetsma, Alex Cukierman, Massimo Giuliodori

Research output: Contribution to journalArticlepeer-review

Abstract

We present legislative, historical and statistical evidence of a substantial upward ratchet in transfers and taxes in the US due to World War II. This finding is explained within a political-economy framework with defense spending responding to a war threat and a median voter in the population who interacts with a (richer) agenda setter in Congress in setting redistribution. While the setter managed to cap redistribution before the War, the War itself raised the status quo tax burden and improved tax collection technology, strengthening the bargaining power of the median voter as defense spending receded. This permanently raised the level of redistribution.

Original languageEnglish
Pages (from-to)1-40
Number of pages40
JournalAmerican Economic Journal: Economic Policy
Volume8
Issue number4
DOIs
StatePublished - 1 Nov 2016

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