Inequality and Redistribution : Evidence from U.S. Counties and States, 1890-1930

Does economic inequality affect redistributive policy? This paper turns to U.S. county data on land inequality over the period 1890-1930 to help address this fundamental question in political economy. Redistributive policy was primarily decided at the local level during this period, making county level data particularly informative. Examining within state variation also reduces the potential impact of latent institutional and political variables. The paper also uses a variety of identification strategies, including historic variables as well as county weather and crop characteristics as instruments for land inequality. The evidence consistently suggests that greater inequality is significantly associated with less redistribution. This negative relationship is especially large in heavily rural counties, where concentrated land ownership implied that landed elites also controlled the majority of economic production