Chasing Disparity: Economic Development Incentives and Income Inequality in the U.S. States
| Autor: | Joshua M. Jansa |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
media_common.quotation_subject
05 social sciences Redistribution (cultural anthropology) 0506 political science Politics Incentive Arts and Humanities (miscellaneous) Economic inequality 0502 economics and business Political Science and International Relations Development economics 050602 political science & public administration Economics State politics 050207 economics Welfare Key policy media_common |
| Zdroj: | State Politics & Policy Quarterly. 20:462-488 |
| ISSN: | 1946-1607 1532-4400 |
| DOI: | 10.1177/1532440019900259 |
| Popis: | Political scientists and policy scholars have traditionally looked at the role of welfare and tax policies in shaping income inequality. Less attention has been paid to the key policy area of economic development. But states spend billions on economic development incentives each year to encourage firms to locate in their state. The few studies that have examined the impact of economic development policy on inequality have found mixed results, and have not considered who shapes and benefits from economic development policy when identifying possible causal mechanisms. I argue that increased incentive spending leads to increased inequality through either a market conditioning effect (incentives disproportionately boost the incomes of top earners prior to taxes) or a redistributive effect (incentives allow wealthy firms, investors, and employees to keep income that would otherwise be taxed and transferred). These mechanisms are tested using data on incentive spending and inequality across the 50 states from 1999 to 2014. The findings demonstrate that incentives increase income inequality via a redistributive effect only. This effect, though, is relatively large, long-lasting, and robust to different measures of incentive spending. Despite using economic development incentives to try to generate greater prosperity, state governments may be inadvertently exacerbating inequality. |
| Databáze: | OpenAIRE |
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