The effect of equalizing differences on tax-price: explaining patterns of political support across industries

Joseph Newhard

Constitutional Political Economy, 2018, vol. 29, issue 3, No 3, 302 pages

Abstract: Abstract Workers who earn wage premiums for adverse job characteristics face a higher tax-price than peers of equal human capital working under more favorable conditions. Facing a higher cost per unit for public goods, they in turn demand a relatively small public sector. This may explain patterns of political affiliation across industries where differences in nonpecuniary aspects are often significant. I test this with county level data on fatality rates and support for the Republican candidate in the 2004 US Presidential election, finding that fatality rates remain positive and significant drivers of GOP support through various regression specifications. These results are robust to cross-sectional and panel data on individual contributions reported to the Federal Election Commission for the 2004, 2008, and 2012 US Presidential elections.

Keywords: Income tax; Tax-price; Equalizing differences; Compensating wage differentials; Political contributions; Voting; Political party; Government size (search for similar items in EconPapers)
JEL-codes: D72 H24 J31 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s10602-017-9251-0

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