Jason L. Saving

Income Inequality and Political Polarization: Time Series Evidence Over Nine Decades

Rising income inequality and political polarization have led some to hypothesize that the two are causally linked. Properly interpreting such correlations is complicated by the multiple factors that drive each of these phenomena, potential feedbacks between inequality and polarization, measurement issues, and statistical challenges for modeling non-stationary variables. We find that a more precise measure of inequality (the inverted Pareto-Lorenz coefficient) is statistically related to polarization while a less precise one (top 1% income share) is not, and that there are bi-directional feedbacks between polarization and inequality. Findings support a nuanced view of the links between polarization and inequality.

Migration, labor-leisure choice, and Pareto suboptimal redistribution

Abstract This paper explores redistributive externalities and the extent to which redistribution helps the poor. We find that traditional work in the migration literature systematically understates the extent to which generous redistributive policies cause members of a common labor market to attract recipients and repel workers. We also find that, when labor–leisure externalities are sufficiently severe and concern for social justice sufficiently great, it is possible for an increase in redistribution to harm the poor. When these conditions are satisfied, redistribution becomes a public bad rather than a public good.

Why Texas Grows Faster: The Role of Smaller Government

Texas has consistently grown faster than the rest of the nation over the past half-century. While many factors have contributed to this—among them, energy, demography, housing-market conditions, and trade—other states with similar traits have not experienced the same rate of expansion. This article explores the extent to which public policy choices can contribute to economic growth and whether Texas’ growth advantage stems at least in part from smaller government.

Are Income Taxes Destined to Rise? The Fiscal Imbalance and Future Tax Policy

We present a model of optimizing government behavior in which a need for increased revenue leads to the introduction of a new revenue source, such as a VAT, accompanied by a reduction in income taxes. We argue that this is a plausible outcome for the United States, in view of international experience and recent fiscal reform proposals, and has important implications for individual investment decisions.