Inequality and Devolution

Introduction

Click here for recent student measuring inequality.

·Is increasing inequality a problem?

·Is it related to policymaking at state level?

ØRatio of top- to bottom-quintile

ØWhy?

«Competition for firms and households

«Ignore external consequences

Policy areas

•Tax Structure

•Antipoverty Policy

•Labor Policy

•Education Finance

Tax Structure

•Progressive versus regressive taxes

•Subnational share increased

•Federal & state budgets:different foundations

•Implications

•Conclusion

Antipoverty Policy

Personal Responsibility Act of 1996

•No individual entitlement

•Limit on number of years

•Block grant

•Federal funding depends on appropriations

Labor Policy

Labor Market Institutions

•Minimum wage

•Unemployment insurance

•Right-to-work laws

Education Finance

• Better educated fare better in income

•State govt largest funder of education

•Will states fund education adequately given:

ØRising demand

ØConstraints on other sources

ØProspect of fiscal pressure

ØFragile commitments to broad-based education

•Concludes:federal involvement needed