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\begin{document}
\title[Democracy and Redistribution]{Democracy, Redistribution, and Inequality: Evidence From the English Poor Law}
\author[Jonathan Chapman]{Jonathan Chapman}
\institute[Unibo]{University of Bologna \newline jonathan.chapman@unibo.it}
\date{}
\frame{\titlepage}


\begin{frame}{Motivation}
	\begin{itemize}
		\item Core question: does income inequality increase redistribution?
		\begin{itemize}
			\item Canonical prediction (Meltzer--Richard): higher mean--median gaps raise demand for redistribution
			\item This logic underpins much of democratic redistribution theory (e.g., Acemoglu \& Robinson; Boix)
		\end{itemize}
		\item Empirical challenge: endogeneity between inequality, institutions, and policy; 
			\begin{itemize}
				\item Elites may block redistribution even after democratization.
				\item Elites may resist democratization when inequality is high
			\end{itemize}
	\end{itemize}
\end{frame}

% Slide 2: This Paper's Strategy
\begin{frame}{This Paper}
	\begin{itemize}
		\item Test the Meltzer--Richard hypothesis using an institutional shock in 19-century England
		\item The 1894 Local Government Act democratized the councils governing the poor law---the 
		\begin{itemize}
			\item Poor relief was the main form of redistributive spending until 1910s
			\item Controlled by local councils---the Guardians of the Poor
			\item LGA removed protections for elites---such as a graduated franchise and property qualifications---in elections for the guardians
		\end{itemize}
		\item Empirical strategy
		\begin{itemize}
			\item Consider the LGA as an exogenous shift in local political power
			\item Show that institutional setting matches Meltzer-Richard framework
			\item Test whether post-reform spending increased by more in high inequality districts
		\end{itemize}
	\end{itemize}
\end{frame}

\begin{frame}
	\centering 
	\Large Conceptual Framework
\end{frame}

\begin{frame}{Conceptual Framework}
	
	
	\begin{itemize}
		\item A simple framework clarifies when inequality should amplify the impact of democratization on government redistribution 
		\item Population consists of poor (share $\lambda$) and rich (share $1-\lambda$).
		\item Poor are employed with probability $\pi$.
		\item Government provides relief $r$, financed by proportional tax $t$.
		\item Utilities of rich and poor:
	\end{itemize}
	
	\bigskip
	
	
	\[
	U_R = u\big(y_R(1 - t)\big)
	\]
	
	\[
	U_P = \pi\, u\big(y_P(1 - t) + \psi r\big) 
	+ (1-\pi)\, u(r) 
	+ \kappa t
	\]
	
	\bigskip
	
	\begin{itemize}
		\item $\psi$ = relief received even when employed
		\item $\pi$ = employment probability (insurance motive)
		\item $\kappa$ = fairness / class conflict motive
	\end{itemize}
	
\end{frame}

\begin{frame}{Political Power and Redistribution}
	
	Government chooses relief $r$ to maximize:
	
	\[
	W = \phi U_P + (1-\phi) U_R
	\]
	
	\bigskip
	
	\begin{itemize}
		\item $\phi$ = political weight placed on the poor
		\item Democratization = increase in $\phi$
	\end{itemize}
	
	\bigskip
	
	\textbf{Meltzer--Richard mechanism:}
	
	If taxation is proportional and spending is redistributive,
	
	\[
	\text{Higher } \frac{\bar y}{y_P}
	\;\; \Rightarrow \;\;
	\text{Higher redistribution}
	\]
	
	\bigskip
	
	But other forms of inequality can also matter: 
	\begin{itemize}
		\item Elite de facto power ($\phi$)
		\item Insurance motives ($\pi$ and $\psi$)
		\item Fairness motives ($\kappa$)
	\end{itemize}
	
\end{frame}

\begin{frame}{Meltzer-Richard and 19-th century Britain}
	\begin{itemize}
		\item The conceptual framework highlights that the Meltzer-Richard model prediction relies on strong institutional assumptions:
		\begin{itemize}
			\item Spending is primarily redistributive
			\item Taxation is approximately proportional
			\item The median voter influences policy
			\item Post-reform democracy is not ``too strong''
		\end{itemize} 
		\item The 19-th century British Poor Law provides such a setting:
		\begin{enumerate}
			\item Poor law councils controlled redistribution but not public goods
			\item Revenue raised via proportional tax on rental value
			\item Democratization remained limited even post-reform (no mass parties, malapportionment)
			\item Rural areas matched binary rich versus poor structure (small middle class)
		\end{enumerate}
	\end{itemize}
\end{frame}


\begin{frame}
	\centering
	\includegraphics[trim=0 0 0 0 , clip, width=4.6in]{images/table1.png}
\end{frame}		


\begin{frame}
\centering 
\Large The Institutional Setting
\end{frame}

\begin{frame}
\frametitle{The Poor Law: a Potted History}
\begin{itemize}
	\item Original ``Old Poor Law'' implemented in 1601, enshrined the right to receipt of relief for destitute 
	\item Funded through local (parish level) taxation on property (the ``rates'')
	\item Clear that support had to be provided...
	\item ...less clear what type or how much support 
	\item Support could be provided:
	\begin{itemize}
		\item In the workhouse (``indoors'')
		\item In the community (``outdoors'')
	\end{itemize}
\end{itemize}
\end{frame}		

\begin{frame}
	\frametitle{The Poor Law: a Potted History}
	\begin{itemize}
		\item 1834 New Poor Law
		\begin{itemize}
			\item Parishes consolidated into ``Poor Law Unions'', governed by ``Guardians of the Poor''
			\item Followed by decline in relief spending (Boyer, 1990)
		\end{itemize}
		\item 1870s: Crusade against Outrelief: renewed attempt to cut relief
		\item 1894: ``Democracy comes to the Poor Law Unions'' (Brundage, 1975) 
		\begin{itemize}
			\item Local Government Act democratizes ``Boards of Guardians''
			\item Institutional protections for landed elites removed
		\end{itemize}		
		\item Poor Law eventually abolished in 1930s
	\end{itemize}
\end{frame}		


\begin{frame}
\frametitle{Poor Law Recipients}
\begin{figure}
	\centering
	\begin{minipage}{0.5\textwidth}
		\item Broad range of rudimentary social insurance \hyperlink{recipientsTable}{\beamergotobutton{More}}
		\begin{itemize}
			\item Unemployed (Unemployed men only c. 2\%)
			\item Temporarily sick
			\item Permanently disabled
			\item Old aged
			\item Pregnant women
			\item Orphans
		\end{itemize}
	\end{minipage}%
	\begin{minipage}{0.5\textwidth}
		\centering
		\includegraphics[width=2in]{images/oliverTwist}
		\label{fig:test2}
	\end{minipage}
\end{figure}
\end{frame}	


\begin{frame}
\frametitle{Governance of the Poor Law Unions}
\begin{itemize}
\item Poor Law Unions were governed by the ``Guardians of the Poor''
\item Controlled expenditure on poor relief but not on education or public goods
\item Discretion over how relief provided and generosity (particularly outdoors)
\item Relief funded out of \textit{local} taxes
\begin{itemize}
	\item Proportional tax on value of property occupied
	\item Did not include ``personal'' property (e.g. stocks), income or profits
\end{itemize}	
\end{itemize}		
\end{frame}	

\begin{frame}
\frametitle{Governance of the Poor Law Unions}
\begin{itemize}
\item Guardians predominantly elected at the level of the parish
\item Electorate consisted of all local taxpayers (``ratepayers'') in the union unless had received poor relief
\item Elites able to influence drawing of Union boundaries in 1834 (Brundage, 1972)
\item Strong institutional protections for the wealthy elite (Lizzeri and Persico, 2004)
\begin{itemize}
	\item Graduated franchise with up to 12 votes for those owning and occupying large properties 
	\item No secret ballot
	\item Significant property qualifications to act as a Guardian
	\item \textit{ex officio} Guardians (Justices of the Peace) sitting alongside elected Guardians
\end{itemize}	
\end{itemize}		
\end{frame}	


\begin{frame}
\frametitle{1890s Democratization}
\begin{itemize}
\item Widespread change to local government institutions in England starting in late 1880s
\item Property qualifications to act as a Guardian significantly reduced in 1893
\item System of governance of PLUs (and other bodies) democratized by the 1894 Local Government Act
\item Anti-democratic elements of elections of Guardians removed
\begin{itemize}
	\item Switch to one vote per voter
	\item Secret ballot implemented					
	\item \textit{Ex officio} Guardians removed
	\item Property qualifications removed entirely
\end{itemize}
\end{itemize}		
\end{frame}	

\begin{frame}
\frametitle{Effects of 1894 Local Government Act}

\begin{quote}
	It was complete revolution...some boards of guardians, certainly for a time, made radical changes and in some cases gave outdoor relief in the most lavish way
\end{quote}

Assistant Commissioner to Poor Law Board, reporting on 1894 LGA

\vspace{5mm}

\begin{itemize}
	\item Reforms led to major changes in the composition of boards of guardians: 
	\item Across a sample of 93 Unions, 46\% of 3,690 guardians had not served before 1894. 
\end{itemize}
\end{frame}


\begin{frame}
\centering 
\Large Data and Empirical Strategy
\end{frame}

\begin{frame}
\frametitle{Empirical Strategy}
\begin{itemize}
	\item Focus on rural Poor Law Unions with stable boundaries (225 in total)
	\item Take 1894 reforms as exogenous institutional change to all Boards of Guardians 
		\begin{itemize}
			\item Identify district-level inequality  
			\item Test whether democratization in 1893--1894 led to greater increases in spending in more unequal districts
		\end{itemize}
\end{itemize}
\end{frame}	


\begin{frame}
\frametitle{Data: PLU Spending}
\includegraphics[width=12.0cm]{images/dataPicFinance}
\end{frame}		



\begin{frame}
\frametitle{Specification}
\begin{eqnarray}
y_{it}=\beta inequality_i\_\textrm{x}\_post1894_t + \gamma_0 X'_{it} + T_{t}+\alpha_{i}+\epsilon_{it}
\end{eqnarray}
\begin{itemize}
	\item $i$=Poor Law Unions, $t$ ranges from 1885--1905
	\item $y$: (Log) Total Relief Expenditure per Capita 
	\item $X$: Demographics, tax base (property value), crop usage and suitability
	\item Inequality: various measures, pre-reform
	\item Identifying assumption: parallel trends, conditional on observable characteristics
\end{itemize}
\end{frame}	






\begin{frame}
\centering 
	\Large Results
\end{frame}

\begin{frame}
	\frametitle{Income Inequality and Post-Reform Spending}
	\begin{itemize}
		\item Estimate mean:median ratio a la Meltzer-Richard, adapted to the fact taxes fell on property rental value
		\begin{itemize}
			\item Ratio of estimated mean: median housing expenditure 
			\item Captures the relative tax burden in this institutional context
		\end{itemize}
		\item Consistent evidence that higher income inequality areas saw larger spending increases post-1894
			$\Rightarrow$ Empirical support for the Meltzer-Richard hypothesis
	\end{itemize}
\end{frame}	

\begin{frame}
	\begin{center}
	\includegraphics[trim = 0 0 0 0, clip, width=8.3cm]{images/table2.png}	
	\end{center}
\end{frame}		

\begin{frame}
	\frametitle{Other Forms of Inequality Post-Reform Spending}
	\begin{itemize}
		\item The previous results provided evidence supporting Meltzer-Richard
		\item But many other forms of inequality may also shape expenditure
		\begin{itemize}
			\item These are of intrinsic interest
			\item And also may mean we are capturing a different channel than suggested by Meltzer-Richard 
		\end{itemize}
		\item The results provide some support for other channels, without disrupting support for Meltzer-Richard 
	\end{itemize}
\end{frame}	

\begin{frame}
	\centering
	\includegraphics[trim = 5 0 0 0, clip, width=3.6in, angle=270]{images/table3.png}
\end{frame}		

\begin{frame}
	\frametitle{Dynamic Effects}
	\includegraphics[width=\textwidth]{images/figure5.png}
	
	\tiny{Note: Bars display 90\% confidence intervals.}
	
	
\end{frame}		

\begin{frame}
	\frametitle{Disaggregating the Effects on Poor Relief Expenditure}
	\begin{itemize}
		\item The main result shows that inequality amplified post-1894 spending
		\item As a further test of the mechanism, we can investigate which types of support changed
		\begin{itemize}
			\item Outdoor relief (direct redistribution)?
			\item Indoor relief (workhouse support)?
			\item Administrative or other spending?
			\item Number of recipients?
		\end{itemize}
		\item Theoretical implications:
		\begin{itemize}
			\item Meltzer--Richard mechanism predicts strongest effects on \textit{redistributive spending}---outdoor relief
			\item Elites may be able to use de facto power for less observable spending
		\end{itemize}
	\end{itemize}
\end{frame}	

	
\begin{frame}
	\centering
	\includegraphics[width=\textwidth]{images/table4.png}
\end{frame}		

\begin{frame}
	\Large Discussion
\end{frame}

\begin{frame}
	\frametitle{Conclusion}
	\begin{itemize}
		\item Democratic reform led to greater spending on redistribution in unequal districts
		\item Consistent with elites suppressing expenditure pre-reform but unable to do so after
		\item This provides empirical support for the Meltzer-Richard mechanism
		\begin{itemize}
			\item Institutional context more closely aligned with theoretical assumptions than most empirical tests
		\end{itemize}
		\item Support for theoretical argument that elites should resist democratization more when inequality is greater
	\end{itemize}
\end{frame}


\begin{frame}
	\frametitle{Local Politics and the Poor Law}
	\begin{itemize}
		\item The overall effects of democratization appear muted
			\begin{itemize}
				\item Caveated by the fact this is not causally identified
			\end{itemize}
		\item We cannot investigate quantitatively because there are no detailed records of elections, but we can use historical sources to speak to this question
		\item Evidence from: 
			\begin{itemize}
				\item 1909 Royal Commission on the Poor Laws Unions
				\item Local Government Manuals listing the Chairmen of Boards 
				\item Detailed historical study of Brixworth Union (Hurren, 2010) 
			\end{itemize}

	\end{itemize}	
\end{frame}

\begin{frame}[label=continuities]
\frametitle{Continuities in Governance}
\begin{itemize}
	\item Gentry less involved post-1894, but not a mass democracy
	\item Poor citizens could influence policy, but with constraints
	\begin{itemize}
		\item Malapportionment still existed (in 1895 Brixworth BDODRA won a majority of votes, but less than a quarter of the available seats)
		\item Few elections, but could be triggered if guardians opposed relief
	\end{itemize}
	\item The role of landowners was diminished, but farmers were predominant on boards before and after 1894
	\item More generally, 54\% of chairmen of the boards stayed the same between 1893 and 1898, with a similar proportion even of \textit{ex officio} chairmen. 
\end{itemize}	

\begin{quote}
	``...the tone and policy of the Boards of Guardians is largely determined by the tenant farmers...Interspersed among the mass of farmers are clergymen, still fewer country gentlemen, and a sprinkling of land agents and small tradesmen...[T]he country gentleman is unable to secure election, or holds aloof because he is not willing to seek election, and...the country laborer is missing because he cannot afford the time''   
\end{quote}

\end{frame}


\begin{frame}
	\frametitle{The Poor Law and Democratic Reform}
	\begin{itemize}
		\item Britain serves as a motivating example for several theories of democratization:
		\begin{itemize}
			\item The Swing Riots and the 1832 Great Reform Act (Acemoglu and Robinson, 2000; Aidt and Franck, 2015)
			\item Intra-elite competition and provision of public goods (Lizzeri and Persico, 2004)
		\end{itemize}
		\item The Poor Law is the main form of redistribution (social safety net) until the early twentieth century
		\item So we might expect nineteenth century democratic reforms to be accompanied by growing poor law expenditure
	\end{itemize}	
\end{frame}


\begin{frame}
	\frametitle{Democratization and Government Spending in UK}
	\begin{figure}
		\centering
		\includegraphics[width=11.0cm]{images/nationalDemocratizations-eps-converted-to.pdf}
	\end{figure}
\end{frame}

\begin{frame}
	\frametitle{This Paper and the 19-th Century Poor Law}
	\begin{itemize}
		\item This paper's results suggests that the decentralization of welfare provision helped elites limit expenditure after 1834 
		\item Use of \textit{de facto} power to shape post-transition institutions (Acemoglu and Robinson, 2008) 
		\item Elites allow democratization for public goods but not redistribution (Lizzeri and Persico, 2004)
	\end{itemize}
\end{frame}




\begin{frame}
\Large 
\centering 

Conclusions 

\end{frame}




 
\end{document}

  