Abstract
The objective of this paper is twofold. First, I present a novel instrumental variable strategy to allow researchers to study the consequences of state policy liberalism in panel data. Second, I study the consequences of state policy liberalism on education and inequality from the 1940s to 2014. I find that state policy liberalism increased college graduation rate, and I find that, in contrast to the conventional wisdom, state policy liberalism did not reduce inequality, but, if anything, increased it.
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