Redistributive Policy: Capacity and Outcomes over the Business Cycle

Abstract

This paper tests predictions of redistributive policy theory. Lowi claims that redistributive policy is not influenced by economic conditions. Limited empirical evidence exists to confirm this prediction, and what little evidence exists is indefinite. Policy theory also suggests that such a policy need not produce actual outcomes, but rather, only possess the capacity to produce outcomes. Do policy outcomes or the capacity to redistribute vary over the business cycle? I posit that neither capacity nor redistribution is affected by economic condition. This paper tests this hypothesis using results from the General Social Survey and data from the Current Population Survey. Revisiting one redistributive program during a period of economic downturn—a US Department of Labor initiative that was found to have produced measurable redistribution during the economic growth of the 1990s—this study examines both capacity and reallocation, and partially confirms that redistributive policies are impervious to recession.