Fiscal Federalism, Social Mobility, and Poverty Alleviation: Essays in Political Economy
The third essay on poverty alleviation treats welfare transfers as a public good which eliminates the public bad of poverty. Local governments establish minimum consumption thresholds for the poor, financed by proportional income taxation. Despite the fact that income transfers are negative for a majority of voters, redistribution to the poor is present in the political equilibrium due to the public good property of poverty alleviation. Using county-level demographic and government expenditure data from the US Census, I find empirical evidence to support the comparative static predictions of the model.
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign