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Title:Redistributive taxation and personal bankruptcy in US states PDF Logo
Authors:Grant, Charles
Koeniger, Winfried
Issue Date:2005
Series/Report no.:IZA Discussion Papers 1805
Abstract:Both personal bankruptcy and redistributive taxes can insure households' consumption risk and both vary considerably across US states. We derive sufficient conditions under which more redistributive taxation makes bankruptcy exemptions less attractive both for the intratemporal insurance and for inter-temporal consumption smoothing. Exploiting data variation over time for 18 US states 1980-2003, we find considerable support for our model's predictions: (i) redistributive taxation and bankruptcy exemptions are negatively correlated; (ii) both policies are associated with more equal consumption growth whereas the effect on unsecured household debt is less clear-cut.
Subjects:personal bankruptcy
consumer credit
redistributive taxes and transfers
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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