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The effect of equalizing differences on tax-price: explaining patterns of political support across industries

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Abstract

Workers who earn wage premiums for adverse job characteristics face a higher tax-price than peers of equal human capital working under more favorable conditions. Facing a higher cost per unit for public goods, they in turn demand a relatively small public sector. This may explain patterns of political affiliation across industries where differences in nonpecuniary aspects are often significant. I test this with county level data on fatality rates and support for the Republican candidate in the 2004 US Presidential election, finding that fatality rates remain positive and significant drivers of GOP support through various regression specifications. These results are robust to cross-sectional and panel data on individual contributions reported to the Federal Election Commission for the 2004, 2008, and 2012 US Presidential elections.

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Notes

  1. This point made to me by William Dougan.

  2. County and City Data Book: 2007. http://www.census.gov/statab/ccdb/ccdbstcounty.html.

  3. There were 4609 workplace fatalities in the US in 2011 and 4690 in 2010. “Census of Fatal Occupational Injuries Summary, 2011.” http://www.bls.gov/news.release/cfoi.nr0.htm.

  4. According to Johnson, while nominal wages differ between the Southern US and the North, the consensus is that real wages do not. However, he finds much cross variation in real wages across large metropolitan areas, such as between Boston and Detroit where the real wage is 23% less in the former. Johnson, “Intermetropolitan Wage Differentials in the United States,” p. 309.

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Acknowledgements

Thanks to my dissertation co-advisor William R. Dougan for taking much interest in this paper and offering me his help and advice throughout its evolution. Thanks to Robert D. Tollison, Robert Fleck, Sergey Mityakov, Kevin Tsui, Curtis Simon, Thomas Saving, Andrew Rettenmaier, Jillian Carr, two anonymous referees, and the attendees of the public economics workshops at Clemson University and those at my presentation at the Private Enterprise Research Center at Texas A&M University.

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  1. Department of Economics and Finance, East Tennessee State University, Johnson City, TN, USA

    Joseph Michael Newhard

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Newhard, J.M. The effect of equalizing differences on tax-price: explaining patterns of political support across industries. Const Polit Econ 29, 281–302 (2018). https://doi.org/10.1007/s10602-017-9251-0

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