Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, April 29, 2021

AI Summary. The six states that gained congressional seats after the 2020 Census, including Texas and Florida, had a lower average state tax burden (7.9% vs 9.5%) and lower average top individual income tax rate (4.4% vs 6.5%) than the seven states that lost seats, including New York and California.

Mark Perry American Enterprise Institute
Date Posted:
Is Database:
Database

Americans are “voting with their feet” moving from high-tax states to lower-tax states with better job opportunities & fiscal health. The 6 states that gained congressional seats had a 2.9% real GDP growth rate in 2019 vs 1.6% in the 7 states that lost seats.

Do states gaining congressional seats have lower taxes and faster growth?

Core argument: The six states gaining congressional seats after the 2020 Census, including Texas and Florida, had an average state tax burden of 7.9% versus 9.5% in the seven states that lost seats, including New York and California.

The 2020 Census revealed that six states, including Texas and Florida, gained congressional seats, while seven states, such as New York and California, lost seats, highlighting a trend of Americans relocating to lower-tax, business-friendly states. The six gaining states exhibited an average state tax burden of 7.9% compared to 9.5% in the losing states. Additionally, the average top individual income tax rate was 4.4% in the gaining states versus 6.5% in the losing states. Economic performance indicators further support this trend: the gaining states had a 2.9% real GDP growth rate in 2019, surpassing the national average of 2.2%, while the losing states lagged at 1.6%. These migration patterns suggest that Americans and businesses are "voting with their feet," moving from economically stagnant, high-tax states to more vibrant, low-tax environments with better job opportunities and fiscal health, as reflected in changes in congressional representation.

Takeaways by Macro Roundup® AI

  1. The six states gaining congressional seats after the 2020 Census, including Texas and Florida, had an average state tax burden of 7.9% versus 9.5% in the seven states that lost seats, including New York and California.
  2. Average top individual income tax rates were 4.4% in the six seat-gaining states compared with 6.5% in the seven seat-losing states.
  3. Real GDP growth in 2019 was 2.9% in the seat-gaining states, above the 2.2% national average, while the seat-losing states grew 1.6%.

The six states that gained congressional seats vs. the seven states that lost seats: How do they compare on a variety of measures?: Extended Excerpt Image 1


Mark Perry, "The six states that gained congressional seats vs. the seven states that lost seats: How do they compare on a variety of measures?" American Enterprise Institute, April 27, 2021, https://www.aei.org/carpe-diem/the-six-states-that-gained-congressional-seats-vs-the-seven-states-that-lost-seats-how-do-they-compare-on-a-variety-of-measures/

The six states that gained congressional seats vs. the seven states that lost seats: How do they compare on a variety of measures?

Based on population shifts recorded in the 2020 Census, there were six US states that gained congressional House seats: Texas (2), Colorado, Montana, Oregon, Florida, and North Carolina; and seven states that lost seats: New York, Illinois, California, Ohio, Michigan, West Virginia, and Pennsylvania. Like I’ve done in the past for other measures of US migration (see here and here), we can ask the question: What significant differences are there between America’s six states that gained population and congressional seats and the seven states that lost population and congressional seats when they are compared on a variety of recent measures of business climate, individual and corporate tax burdens, state fiscal health, utility (electricity) costs, economic performance, and labor market dynamism? In other words, why are some states like Texas and Florida gaining businesses, residents, and House seats and why are states like California, New York, and Illinois losing businesses, population and House seats?

Assuming that many Americans and US companies “move/vote with their feet” when they relocate from one state to another, is there any empirical evidence to suggest that Americans are moving to states that are relatively more economically vibrant, dynamic, and business-friendly, with lower tax and regulatory burdens, lower energy costs, with more economic and job opportunities, from states that are relatively more economically stagnant with higher taxes and more regulations, higher energy costs, and with fewer economic and job opportunities?

The six states that gained congressional seats vs. the seven states that lost seats: How do they compare on a variety of measures?: Extended Excerpt Image 2


The table above (click to enlarge) summarizes a comparison between the two groups of US states (six House seat gainers and seven House seat losers) on 11 different measures of economic performance, labor market dynamism, business climate, electricity and housing costs, tax climate, and fiscal stability for those 13 states. And on each of those 11 measures, there is empirical evidence that the six gaining states are on average out-performing the seven losing states, suggesting that migration patterns in the US do reflect Americans and firms “voting/moving with their feet” from high-tax, business-unfriendly, fiscally unhealthy, economically stagnant states with relatively high utility (electricity) costs to lower-tax, more business-friendly, fiscally healthy and economically vibrant states with lower energy costs. Let’s review those 11 measures, one at a time:

1. Right-to-Work. Three (half) of the six US states gaining House seats are Right-to-Work (RTW) states, while five of the seven losing states are forced-unionism states (all except Michigan and West Virginia). In my Analysis of the top ten inbound and top ten outbound US states in 2019 based on state-to-state migration data from Census, there was even stronger evidence of migration patterns based on states’ union policies. Nine of the top ten inbound US states in 2019 were Right-to-Work (RTW) states (all except Colorado), while eight of the top ten outbound states were forced-unionism states. According to many studies like this one by my AEI colleague Jeff Eisenach (emphasis mine):

There is a large body of rigorous economic research on the effects of RTW laws on economic performance. Overall, that research suggests that RTW laws have a positive impact on economic growth, employment, investment, and innovation, both directly and indirectly.

Therefore, it would make sense that American businesses and workers are leaving low-growth, forced-unionism states like New York and California for higher-growth, RTW states like Texas and Florida with more dynamic labor markets and greater job opportunities.

2. State Tax Burden. Last month, Wallet Hub released a study on the “Overall Tax Burden by State” that measures the percentage of each state’s total personal income that goes to state and local taxes in the form of (a) individual income taxes, (b) property taxes, and (c) sales and excise taxes. The average state tax burden for the six gaining states is 7.9% compared to a 9.5% average tax burden for the seven losing states. Three of the states losing House seats ranked in the top ten highest-taxed states: New York (No. 1 at 12.79%), Illinois (No. 9 at 9.52%), and California (No. 10 at 9.48%).

3. Income Taxes. a) According to the Tax Foundation, the average top individual income tax rate for the six gaining states was 4.4% in 2020 compared to an average top tax rate of 6.5% in the seven outbound states. Two of the gaiing states — Florida and Texas — have no state individual income tax.

b) Similarly, the average top corporate tax rate based on Tax Foundation data in the six gaining states was 4.3% last year compared to 6.8% in the seven losing states. It’s an ironclad law of economics that if you tax something you get less of it, and it’s therefore, no surprise that Americans and businesses are leaving relatively high tax states and moving to relatively low tax states.

4. Forbes Best States for Business. Based on its most recent annual state ranking that measures six business categories: business costs, labor supply, regulatory environment, current economic climate, growth prospects, and quality of life, Forbes rated four of the six gaining states among the nine best states for business in 2019 — North Carolina at No. 1, Texas at No. 2, Florida at No. 5 and Colorado at No. 9. The average Forbes ranking for the six gaining states last year was 11 out of 50 (top quarter) compared to the average ranking of 34 out of 50 (bottom half) for the seven losing states.

5. Business Tax Climate Rankings. Every year The Tax Foundation calculates and reports its State Business Tax Climate Index based on each US state’s corporate income taxes, individual income taxes, sales taxes, property taxes, and unemployment insurance taxes. In the most recent Tax Foundation rankings, two of the seven losing states — New York and California — were among the three US states along with No. 50 New Jersey with the worst business tax climate. For the six gaining states, all but Montana were in the top half of states for the best (lowest) tax climate. The average business tax climate ranking for the six gaining states was 11 (top quarter) compared to an average ranking of 34 (bottom half) for the seven losing states.

6. State Fiscal Stability Rankings. US News and World Report recently ranked US states by “fiscal stability” based on both on a short-term and long-term basis (No. 1 being the most fiscally stable state and No. 50 the most fiscally unstable state). State credit ratings and public pension liabilities measure long-term financial health, while asset liquidity and a state’s budget management (spending vs. revenue) are used to measure short-term health. According to the report, “The fiscal stability of a state’s government is vital to ensuring the success of government-sponsored programs and projects and the quality of life of the state’s residents.”

The average fiscal stability ranking for the six gaining states is 17 (top one-third) compared to the average ranking of 35 for the seven losing states. Three of the six gaining states ranked among the ten most fiscally stable states — North Carolina at No. 7, Florida at No. 8 and Texas at No. 10. Two of the seven losing states ranked among the most fiscally unstable states — Pennsylvania at No. 47 and Illinois dead last at No. 50.

7. Average Electricity Cost by state is another factor that might contribute to businesses and households moving from states with relatively high energy costs to states with lower energy costs. According to the most recent data from the Energy Information Administration on the “Average Price of Electricity to Ultimate Customers,” the average price of electricity for all sectors (residential, commercial, industrial, and transportation) is 9.4 cents per kilowatt-hour in the six gaining states. For the seven losing states, the average cost of electricity is 11.3 cents per kilowatt-hour, which is more than 20% higher than the gaining states. Compared to the US average price of electricity is 10.29 cents per kilowatt-hour, the average price of electric power in the six gaining states is almost 9% below the national average and the average price in the seven losing states is nearly 10% above average. Because electricity costs affect both the cost of living for households and the cost of operation for businesses, it’s not surprising that the states with higher electricity costs are losing population while the states with lower energy costs have gained businesses and residents.

8. Economic Performance. The last three categories in the table above show economic performance measures for each of the 13 states for (a) state real GDP growth rate in 2019, b) the average state jobless rate in 2019, and c) the annual employment growth in 2019. Figures for 2020 are available but were so distorted by the effects of the pandemic that I’m using 2019 figures here as more representative. For the six gaining states, the average real GDP growth rate in 2019 was 2.9% (above the national average of 2.2%), the average jobless rate was 3.4% (below the national average of 3.7%), and the average annual job growth was 1.9% (above the national average of 1.35%). In contrast, the average figures for the seven losing states were below-average 1.6% for real GDP growth, above-average 4.2% for the jobless rate, and below-average 0.6% for annual job growth. In other words, compared to the seven losing states, output grew almost twice as fast (2.9% vs. 1.6%) in the six gaining states, the average jobless rate was almost a percentage point lower (3.4% vs. 4.0%), and annual employment growth was more than three times higher (1.9% vs. 0.6%).

Those three key economic indicators suggest that the gaining states are stronger economically on average than the seven losing states with faster economic growth, and more robust labor markets with lower jobless rates and greater rates of job creation.

Bottom Line: Based on population changes between 2000 and 2020 recorded in the 2020 Census that will be reflected in changes in House seats, the migration patterns of US households (and businesses) followed the predictable patterns that have been documented in previous CD studies. To answer the questions posed above, there are significant differences between the six states that gained House seats and seven states that lost seats when they are compared on a variety of 11 measures of economic performance, business climate, tax burdens for businesses and individuals, fiscal stability, electricity costs, and labor market dynamism. There is empirical evidence that Americans and businesses “vote with their feet” when they relocate from one state to another, and the evidence suggests that Americans are moving away from economically stagnant, fiscally unhealthy states with higher tax burdens and unfriendly business climates with higher energy costs and fewer economic and job opportunities, to fiscally sound states that are more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens, lower energy costs and more economic and job opportunities. And the fact that those population shifts are reflected in changes in Congressional delegations every ten years is an effective way to reward economically successful, low-tax, business-friendly states like Texas and Florida and punish economically stagnant, high-tax, business-unfriendly states like New York and California. Let’s hope for even more changes in House seats ten years from now in 2030 as states might better learn the economic lesson that they have to compete to attract and retain businesses, residents, and workers.

Ed Comment:Why do high tax states have substantially lower fiscal stability? Thinking out loud... "Older" states have greater legacy pension liability. But you would think they have offsetting economies of scale and that talented people (i.e., people who pay more taxes than they consume in gov services) were migrating to them. Seems clear that local Dems wrecked them. Rust belt is full of high quality engineers and blue-collar workers, but unions made them to be too highly paid to be competitive, so they are losing jobs because they can't adapt. AC made sunbelt more attractive, but Calif is losing. That seems nuts. Housing costs (land use restrictions) must be a factor. But immigration should drive up housing and growth. If you factor out immigration, migration would be even worse.
Mark Perry on the new Census numbers, "...To answer the questions posed above, there are significant differences between the six states that gained House seats and seven states that lost seats when they are compared on a variety of 11 measures of economic performance, business climate, tax burdens for businesses and individuals, fiscal stability, electricity costs, and labor market dynamism. There is empirical evidence that Americans and businesses “vote with their feet” when they relocate from one state to another, and the evidence suggests that Americans are moving away from economically stagnant, fiscally unhealthy states with higher tax burdens and unfriendly business climates with higher energy costs and fewer economic and job opportunities, to fiscally sound states that are more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens, lower energy costs and more economic and job opportunities...."

AI Summary. Ireland's tuition-free undergraduate policy raised enrollment by 20% over a decade while funding per student fell 25%, as government budgets did not keep pace with student numbers. Faculty-to-student ratios worsened and research output declined, and the number of Irish universities in the global top 200 fell from 3 to 1.

Jason D. Delisle American Enterprise Institute
Date Posted:
Is Database:
Database

Ireland’s free college experiment has led to a decline in its universities’ international rankings, highlighting potential pitfalls for similar policies elsewhere. @JasonDDelisle.

Does free college tuition reduce university funding and educational quality?

Core argument: Ireland's tuition-free undergraduate education raised enrollment 20% over a decade while funding per student fell 25%, as government budgets failed to keep pace with growing student numbers.

Ireland's implementation of tuition-free undergraduate education has led to a decline in its universities' international rankings, highlighting potential pitfalls for similar policies elsewhere. The policy, introduced to increase access to higher education, resulted in a 20% rise in enrollment over a decade. However, funding per student decreased by 25% as government budgets failed to keep pace with growing student numbers. This financial strain has impacted the quality of education, with faculty-to-student ratios worsening and research output declining. Consequently, Irish universities have slipped in global rankings, with the number of institutions in the top 200 falling from 3 to 1 over the past decade. This case underscores the importance of balancing access with sustainable funding to maintain educational standards and international competitiveness.

Takeaways by Macro Roundup® AI

  1. Ireland's tuition-free undergraduate education raised enrollment 20% over a decade while funding per student fell 25%, as government budgets failed to keep pace with growing student numbers.
  2. The number of Irish universities in the global top 200 fell from 3 to 1 over the past decade, alongside worsening faculty-to-student ratios and declining research output.
  3. Ireland's experience underscores the importance of balancing expanded access to higher education with sustainable funding to maintain educational standards and international competitiveness.

Irelands free-college experiment: Lessons and warnings for US policymakers: Extended Excerpt Image 1


Jason D. Delisle and Arthur M. Hauptman, "Ireland’s free-college experiment: Lessons and warnings for US policymakers," American Enterprise Institute, April 28, 2021, https://www.aei.org/research-products/report/irelands-free-college-experiment-lessons-and-warnings-for-us-policymakers/

Ed Comment:Turns out finances aren’t the relevant constraint as so many claim. No surprise, brain power and other hidden traits (e.g., conscientiousness) are the predominant constraint.
Report from AEI looks at the experience of Ireland after they put into place tuition-free higher education during the 1990s, "...In the mid-1990s, Ireland abolished tuition for full-time undergraduates to expand access to higher education and address social inequalities. Under this “free-fees” policy, 90 percent of full-time Irish undergraduates do not pay tuition (which most Europeans typically refer to as “tuition fees”). However, students pay other fees that policymakers have increased substantially since the free-fees policy was put in place. This “student contribution” is now €3,000 ($3,600) per student, per year, although many low-income students receive grants to offset it..."
Paper finds that higher education enrollment has increased after tuition was culled, however much of this was likely due to demographics, particularly inflows of younger immigrants, "...At first glance, the Irish higher education system appears to have benefited from the free-fees policy. More students now enroll in higher education, and graduation rates have remained high since the policy was adopted. Attainment rates have also soared in recent decades. Ireland now boasts one of the highest attainment rates in the world: More than half of Irish workers hold at least a baccalaureate degree, and 70 percent hold some form of tertiary degree. The number of full-time students enrolled in Irish higher education has doubled since free tuition fees were established in the mid-1990s, from roughly 95,000 students in 1995 to more than 180,000 in 2018. The Irish population itself increased during that time by only about one-third. A closer look at trends over time suggests that there were two principal drivers of Ireland’s rapid growth in enrollment—but only one appears linked to the free-fees policy. In 1995, when free fees were introduced, Irish youth under age 20 represented 34 percent of the total population. In nearby European countries, the share was 25 percent.26Thus, Ireland had more built-in demand for higher education than most of its neighbors did. Those demographics would have driven enrollment higher even without the free-fees policy..."

They sort of buried the lead, educational spending relative to GDP dropped and during this period of time. "...Ireland’s universities have fallen considerably in rankings, such as the QS World University Rankings and the Times Higher Education World University Rankings..."Given US schools are world beaters this sort of policy risk undermining our elite research universities.

Monday, May 3, 2021

AI Summary. Individual income taxes made up 24.2% of state and local tax collections, exceeding general sales taxes at 23.3%, averaging $1,303 per capita. Collections varied widely, from $3,407 in New York and $2,411 in California to $36 in Tennessee and $78 in New Hampshire, which taxed only investment income.

Janelle Cammenga Tax Foundation
Date Posted:
Is Database:
Database

Individual income taxes accounted for 24.2% of state & local tax collections in FY 2018, with $1,303 collected per capita on average. High-income states like New York ($3,407) & California ($2,411) led in per capita collections. @TaxFoundation

How much do state and local income tax collections vary per person?

Core argument: Individual income taxes made up 24.2% of state and local tax collections in FY 2018, surpassing general sales taxes at 23.3%, with an average of $1,303 collected per capita.

In FY 2018, individual income taxes accounted for 24.2% of state and local tax collections, surpassing general sales taxes at 23.3%. On average, $1,303 per capita was collected, with significant variation due to differing rate structures and income distributions. High-income states like New York ($3,407) and California ($2,411) led in per capita collections, while states like Tennessee ($36) and New Hampshire ($78) taxed only investment income. Among states taxing wage income, North Dakota ($485) and New Mexico ($599) had the lowest collections. This data highlights the reliance on income taxes as a revenue source and the impact of state-specific tax policies on revenue generation.

Takeaways by Macro Roundup® AI

  1. Individual income taxes made up 24.2% of state and local tax collections in FY 2018, surpassing general sales taxes at 23.3%, with an average of $1,303 collected per capita.
  2. New York led per capita individual income tax collections at $3,407, followed by California at $2,411, with variation across states reflecting differing rate structures and income distributions.
  3. Tennessee ($36) and New Hampshire ($78) collected the least per capita, taxing only investment income, while North Dakota ($485) and New Mexico ($599) collected the least among states taxing wage income.

Janelle Cammenga, "State and Local Individual Income Tax Collections Per Capita," Tax Foundation, April 28, 2021, https://taxfoundation.org/income-tax-per-capita-2021/

State and Local Individual Income Tax Collections Per Capita

The individual income tax is one of the most significant sources of revenue for state and local governments. In fiscal year 2018, the most recent year for which data are available, individual income taxes generated 24.2 percent of state and local tax collections, just ahead of general sales taxes (23.3 percent).

The following map shows combined state and local individual income tax collections per capita for each state in fiscal year 2018. As of that year, 41 states and the District of Columbia levied broad-based taxes on wage income and investment income, while two states—New Hampshire and Tennessee—taxed investment income but not wage income. Tennessee’s tax on investment income—known as the “Hall tax”—was fully repealed as of January 2021. In all, eight states forgo an individual income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

State and Local Individual Income Tax Collections Per Capita: Extended Excerpt Image 1


On average, state and local governments collected $1,303 per capita in individual income taxes, but collections varied widely from state to state. This was a function of both rate structures and income distributions, with higher-income states generating significantly more revenue per capita whether they had a high graduated rate system, like California, or a modest flat-rate income tax, like Massachusetts.

New York ($3,407), the District of Columbia ($2,946), Connecticut ($2,725), Maryland ($2,470), California ($2,411), and Massachusetts ($2,365) came in with the top collections per capita. Tennessee ($36) and New Hampshire ($78) taxed investment income but not wage income, making them the states with the lowest individual income tax collections per capita. Of the states that tax wage income, the lowest collections per capita in fiscal year 2018 were in North Dakota ($485), New Mexico ($599), Mississippi ($622), Arizona ($635), and Louisiana ($697).

AI Summary. The authors organize inequality-reducing policies into a 3x3 matrix that crosses target income groups — low-income, middle-class, and high-income — with the stage of intervention. It distinguishes "pre-distribution" policies, which address inequality before economic outcomes are determined, from redistribution policies such as progressive taxation and social insurance that adjust outcomes afterward.

Stefanie Stantcheva National Bureau of Economic Research
Date Posted:
Is Database:
Database

A 3×3 matrix organizes policies to reduce inequality, focusing on target income groups & stages of economic intervention, distinguishing btw pre-distribution & redistribution policies.

Can inequality policies be organized by income group and intervention stage?

Core argument: The inequality-reduction framework is organized as a 3×3 matrix combining three target income groups — low-income households, middle classes, and high-income groups — with stages of economic intervention.

The framework for reducing inequality is organized into a 3x3 matrix focusing on two key dimensions: target income groups and stages of economic intervention. Policies are tailored to low-income households, middle classes, or high-income groups, each facing unique economic challenges. The matrix distinguishes between "pre-distribution" and "redistribution" policies. Pre-distribution policies aim to address inequalities before economic outcomes are determined, while redistribution policies, such as progressive taxation and social insurance, adjust inequalities after economic activities like employment and investments have occurred. This structured approach allows for targeted interventions that can effectively address the specific needs of different income groups at various stages of economic development, promoting inclusive prosperity.

Takeaways by Macro Roundup® AI

  1. The inequality-reduction framework is organized as a 3×3 matrix combining three target income groups — low-income households, middle classes, and high-income groups — with stages of economic intervention.
  2. The matrix separates "pre-distribution" policies, which address inequalities before economic outcomes are determined, from "redistribution" policies such as progressive taxation and social insurance that adjust inequalities after employment and investment have occurred.
  3. The framework holds that each income group faces distinct economic challenges, allowing targeted interventions at various stages of economic development to promote inclusive prosperity.

Rodrik/Stantcheva, “…The framework can be summarized by a 3 x 3 matrix, shown in Figure 1. 3 We consider that the discussion of policies can be organized around two questions or dimensions. First, which income group is the target of the policies intended to counter inequality or economic insecurity? Is it mainly the low-income households at the very bottom of the income distribution? Or is it rather the middle classes, who have traditionally had access to good jobs, but are increasingly facing reduced standards of living and growing economic insecurity in many nations? Is it instead the high-income or high wealth households at the very top that keep concentrating more economic power - as well as political power, possibly -- individually and through stocks in large corporations? Policy priorities will naturally differ depending on whether the target is the poor at the bottom, the middle classes, or the top of the income distribution. This dimension of policy is captured by the rows of the matrix in Figure 1. The second question relates to the stage of the economy where the intervention takes place.A useful and increasingly frequently used distinction, based on Hacker (2011), is between “pre-distribution” and “redistribution” policies. In this terminology, “redistribution” policies are ex post policies, that transfer income and wealth once they have been realized (e.g., redistributive transfers, progressive taxation, and social insurance). They reshape inequalities after the economic decisions regarding employment, investments, or innovations have been made. We will use the term postproduction policies instead to denote these policies….”

A Policy Matrix For Inclusive Prosperity: Extended Excerpt Image 1


Dani Rodrik and Stefanie Stantcheva, "A Policy Matrix For Inclusive Prosperity," National Bureau Of Economic Research, April 2021, https://www.nber.org/papers/w28736