Essays in Political Economy

Loading...
Thumbnail Image

Persistent link to this item

Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

Essays in Political Economy

Published Date

2018-08

Publisher

Type

Thesis or Dissertation

Abstract

How does the interaction between inequality and social mobility affect the choice of fiscal policy? I analyze this question in a model of democratic poli- tics with imperfect tax enforcement, where the ability of individuals to evade taxes limits the amount of redistribution in the economy. Social mobility creates an insurance motive that increases voluntary compliance, favoring the tax enforcement process. In such an environment, redistributive pressures brought about by an increase in inequality are only implementable in highly mobile societies. On the contrary, when mobility is low, higher inequality reduces tax rates and redistribution. I empirically test this prediction using data on absolute upward mobility for the 50 US states and the District of Columbia, and measuring redistribution as state and local government expenditure per capita. I find a strong, positive and highly significant relation between inequality and redistribution for states with relatively high levels of social mobility: A one Gini-point increase in inequality is associated to roughly $800 higher expenditure per capita. This effect dissipates in states with low levels of mobility. Finally, I embed the politico-economic environment of the paper in a simple endogenous growth model, in order to analyze how inequality directly and indirectly affects the growth process when social mobility and tax evasion are taken into account.

Description

University of Minnesota Ph.D. dissertation. 2018. Major: Economics. Advisor: V.V. Chari. 1 computer file (PDF); 92 pages.

Related to

Replaces

License

Collections

Series/Report Number

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Suggested citation

Pelaez-Campomanes Guibert, Ignacio. (2018). Essays in Political Economy. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/201129.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.