Political Economy of Redistribution in the United States in the Aftermath of World War II--Evidence and Theory
American Economic Journal: Economic Policy
vol. 8,
no. 4, November 2016
(pp. 1-40)
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.Citation
Beetsma, Roel, Alex Cukierman, and Massimo Giuliodori. 2016. "Political Economy of Redistribution in the United States in the Aftermath of World War II--Evidence and Theory." American Economic Journal: Economic Policy, 8 (4): 1-40. DOI: 10.1257/pol.20140193Additional Materials
JEL Classification
- D72 Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H11 Structure, Scope, and Performance of Government
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H56 National Security and War
- N32 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: U.S.; Canada: 1913-
- N42 Economic History: Government, War, Law, International Relations, and Regulation: U.S.; Canada: 1913-
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