Trickle-down vs. Trickle-up Economics
Kenderly Faucher
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Finance
Faculty Research Mentor: Huaibing Yu
Abstract:
The main objective of this study is to compare the effects that both the trickle-down and trickle-up economics theory can have on the U.S economy. Trickle-down economics is the notion that the poor will benefit from the rich getting wealthier at some point in time. It is thought that if the rich get wealthier, then they will then uplift and share with those who are stricken with poverty. It is also thought that if big corporations have to pay lower taxes, they will then use those extra funds to compensate their workers with higher wages. On the other hand, trickle-up economics is the idea that policies that directly and positively affect those of a lower income status will benefit the economy as a whole. Both theories are simply on opposite sides of the economic policy spectrum and are also moderately criticized. This study is influenced by the results of the 2024 election and the tax plans that President Donald J. Trump has for the U.S. He plans to cut taxes for those who are wealthier. It certainly raised the question of whether this has already been done in the past, and what benefits, if any, did it have on groups of people from different income statuses. During Ronald Reagan’s Presidency from 1981-1989, the core of his economic policies mostly aligned with the trickle-down economics theory. On the contrary, during Barack Obama’s presidency from 2009-2017, most of his economic policies aligned with the trickle-up economics theory. It is ideal to compare these two presidents to each other specifically because both served 8-year long presidential terms and they both inherited an economy plagued by recession. Therefore, in this study, the GDP, unemployment rates, labor force and productivity growth by the start and end of their presidencies will be compared.