Econometrica: May 1973, Volume 41, Issue 3

Notes and Comments: Public Goods and Income Distribution: Some Further Results<561:PGAIDS>2.0.CO;2-0
p. 561-568

Shlomo Maital

A new method for imputing benefits of government expenditures on public goods to various income classes was recently put forward by Henry Aaron and Martin McGuire. They fail to present conclusive empirical results, however, lacking a parameter whose value (they imply) is heretofore unmeasured. This note utilizes three independent, identical empirical estimates of the crucial parameter to compute believable and unambiguous estimates of the net incidence of the entire fiscal system. For the United States in 1961, it is found that benefits from public goods are regressively distributed. It is further suggested that the desire to equalize incomes requires provision of less, not more, public goods.

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