Why Doesn't the United States Have a European-Style Welfare State?


Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001. “Why Doesn't the United States Have a European-Style Welfare State?” Brookings Papers on Economic Activity 2. Copy at http://www.tinyurl.com/nx3t6a8
423_0332-alesina11.pdf213 KB

Date Published:

Nov 1, 2001


European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre–tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.



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