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THE DISTRIBUTIONAL CONSEQUENCES OF GOVERNMENT SPENDING AND TAXATION IN THE U.S., 1989 AND 2000
Author(s) -
Wolff Edward N.,
Zacharias Ajit
Publication year - 2007
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2007.00251.x
Subject(s) - economics , government (linguistics) , consumption (sociology) , inequality , government expenditure , government spending , public economics , government revenue , net worth , labour economics , public finance , macroeconomics , welfare , market economy , mathematical analysis , social science , philosophy , linguistics , mathematics , sociology , debt
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.