Income Inequality and Redistributive Spending: Evidence from Panel Data of Texas Counties

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Abstract

Abstract: The relationship between redistributive spending and income inequality has been of interest to researchers for several decades. Existing literature has largely focused on country-level studies and may be broadly divided into two groups: studies that find a positive relationship between the two and studies that find a negative relationship. The positive association is usually explained through the median voter theory and the negative association through the social insurance theory. This study offers a test of the median voter and social insurance hypotheses by examining the relationship between economic inequality, voter turnout and redistributive spending at the sub-national level among the 50 largest counties in Texas over years 2006 to 2012. One of the advantages of using a regional sample is that counties are relatively more homogeneous and allow for the collection of better records across time. Random effects models suggest that income inequality is positively associated with redistributive spending. The study improves our understanding of the patterns of redistribution at the sub-national level and highlights the importance of careful inter-temporal modelling of relationships between redistributive spending and inequality.

Original languageEnglish
Pages (from-to)735-754
Number of pages20
JournalLocal Government Studies
Volume41
Issue number5
DOIs
StatePublished - 3 Sep 2015

Keywords

  • Income inequality
  • median voter theory
  • redistributive spending
  • social insurance theory
  • voter turnout

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