Why Governments Give Away Economic Incentives That Increase Inequality

The Science of Politics

Amazon’s headquarters decisions are drawing attention to economic development incentive programs designed to bring businesses and jobs to states and localities, while local opposition in New York drew attention to their role in inequality. Why do states and localities continue to offer them, despite academic research showing they are ineffective? Nathan Jensen finds that voters reward politicians who offer (even unnecessary) incentives, meaning they keep on offering bigger checks. Cynthia Rogers finds that state incentives increase the gaps between the rich and the poor, but they remain an ever-popular tool. Studies: “Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain" and "Income Inequality and Economic Development Incentives in US States.” Interviews: Nathan Jensen, University of Texas and Niskanen Center; Cynthia Rogers, University of Oklahoma Photo Credit: Thierry Ehrmann under CC By 2.0 https://www.flickr.com/photos/home_of_chaos/37909812316