The Distributional Consequences of Government Spending and Taxation in the U.S., 1989 and 2000

24 Pages Posted: 15 Nov 2007

See all articles by Edward N. Wolff

Edward N. Wolff

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER); Bard College - Levy Economics Institute

Ajit Zacharias

Bard College - Levy Economics Institute

Abstract

We assess the effects of government expenditures and taxation on household economic well-being in the United States in 1989 and 2000. Net government expenditure is estimated as the difference between government expenditures incurred on behalf of the household sector - transfers and public consumption - and the taxes paid by that sector. We incorporate the estimates of net government expenditures into a wealth-adjusted measure of income. We find that overall inequality in our income measure is considerably reduced by net government expenditures. Results from decomposition analysis show that the inequality-reducing effect of net government expenditures owed more to expenditures than to taxes.

Suggested Citation

Wolff, Edward N. and Zacharias, Ajit, The Distributional Consequences of Government Spending and Taxation in the U.S., 1989 and 2000. Review of Income and Wealth, Vol. 53, No. 4, pp. 692-715, December 2007. Available at SSRN: https://ssrn.com/abstract=1030128 or http://dx.doi.org/10.1111/j.1475-4991.2007.00251.x

Edward N. Wolff (Contact Author)

New York University (NYU) - Department of Economics ( email )

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Bard College - Levy Economics Institute

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Ajit Zacharias

Bard College - Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758-7734 (Phone)
845-758-1149 (Fax)

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