Redistributive Taxation and Personal Bankruptcy in U.S. States

Charles Grant and Winfried Koeniger

Journal of Law and Economics, 2009, vol. 52, issue 3, 445-467

Abstract: Personal bankruptcy regulation and redistributive taxes and transfers vary considerably across U.S. states and over time. Our hypothesis is that both policies are imperfect substitutes in insuring consumption of risk-averse agents in incomplete markets. Exploiting data variation over time for 18 U.S. states for the period 1980-2003, we find considerable support for this hypothesis: redistributive taxation and bankruptcy exemptions are negatively correlated, and both policies are associated with more equal consumption growth. (c) 2009 by The University of Chicago. All rights reserved.

Date: 2009
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Working Paper: Redistributive Taxation and Personal Bankruptcy in US States (2005)
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