Racism and Redistribution in the United States: A Solution to the Problem of American Exceptionalism

Woojin Lee () and John Roemer

No 1462, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: The two main political parties in the United States put forth policies on redistribution and on issues pertaining directly to race. We argue that redistributive politics in America can be fully understood only by taking account of the interconnection between these issues, and the effects of political competition upon the multi-dimensional party platforms. We identify two mechanisms through which racism among American voters decreases the degree of redistribution that would otherwise obtain. Many authors have suggested that voter racism decreases the degree of redistribution due to an anti-solidarity effect: that (some) voters oppose government transfer payments to minorities whom they view as undeserving. We point to a second effect as well: that some voters who desire redistribution nevertheless vote for the anti-redistributive party (the Republicans) because that party's position on the race issue is more consonant with their own, and this, too, decreases the degree of redistribution. We call this the policy bundle effect. The effect of voter racism on redistribution is the sum of these two effects. We propose a formal model of multi-dimensional political competition that enables us to estimate the magnitude of these two effects, and estimate the model for the period 1976-1992. We numerically compute that during this period voter racism reduced the income tax rate by 11-18 percentage points; the total effect decomposes about equally into the two sub-effects. We also find that the Democratic vote share is 5-38 percentage points lower than it would have been, absent racism.

Keywords: racism; distribution; endogenous parties; party unanimity Nash equilibrium; anti-solidarity effect (search for similar items in EconPapers)
JEL-codes: D3 D7 H2 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2004-06
New Economics Papers: this item is included in nep-lab
Note: CFP 1190.
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Citations: View citations in EconPapers (16)

Published in Journal of Public Economics (2006), 90: 1027-1052

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