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Regional Income Disparity and the Size of the Public Sector

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  • MICHELE GIUSEPPE GIURANNO

Abstract

This paper explores the impact of income inequality between jurisdictions on government decision making affecting the size of the public sector. We model policy choices as the outcome of regional representatives' negotiations in the legislature. We show that the more unequal interregional income distribution is, the greater the underprovision of public goods. More specifically, greater interregional income disparity leads to a smaller public sector. A wealthier economy as a result may have a relatively smaller government size when income disparity increases.

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  • Michele Giuseppe Giuranno, 2009. "Regional Income Disparity and the Size of the Public Sector," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 697-719, October.
    • Handle: RePEc:bla:jpbect:v:11:y:2009:i:5:p:697-719
    DOI: 10.1111/j.1467-9779.2009.01426.x
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    1. Orso, Cristina Elisa, 2009. "Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market," POLIS Working Papers 135, Institute of Public Policy and Public Choice - POLIS.
    2. Giuranno, Michele G. & Nocco, Antonella, 2020. "Trade tariff, wage gap and public spending," Economic Modelling, Elsevier, vol. 91(C), pages 167-179.
    3. Giampaolo Arachi & Michele G Giuranno & Paola Profeta, 2018. "Introduction to the Special Issue ‘Inequality and Public Policies’, CESifo Economic Studies 2018," CESifo Economic Studies, CESifo, vol. 64(3), pages 339-344.
    4. Fabio Fiorillo & Agnese Sacchi, 2012. "The Political Economy of the Standard Level of Services: The Role of Income Distribution," CESifo Working Paper Series 3696, CESifo.
    5. Pablo Beramendi & Melissa Rogers, 2021. "Disparate geography and the origins of tax capacity," The Review of International Organizations, Springer, vol. 16(1), pages 213-237, January.
    6. Giuranno, Michele, 2009. "The logic of party coalitions with political activism and public financing," POLIS Working Papers 134, Institute of Public Policy and Public Choice - POLIS.
    7. Fabio Fiorillo & Michele G. Giuranno & Agnese Sacchi, 2021. "Asymmetric decentralization: distortions and opportunities," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(2), pages 625-656, July.
    8. Giuranno, Michele G., 2010. "Pooling sovereignty under the subsidiary principle," European Journal of Political Economy, Elsevier, vol. 26(1), pages 125-136, March.
    9. Giuranno, Michele G. & Rongili, Biswas, 2012. "Inter-jurisdictional migration and the size of government," MPRA Paper 42604, University Library of Munich, Germany.
    10. Michele Giuseppe Giuranno, 2009. "Regional Income Disparity and the Size of the Public Sector," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 697-719, October.
    11. Giuranno Michele G. & Biswas Rongili, 2019. "Internal Migration and Public Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-16, October.
    12. Privileggi, Fabio, 2008. "On the transition dynamics in endogenous recombinant growth models," POLIS Working Papers 120, Institute of Public Policy and Public Choice - POLIS.
    13. Piero Cavaleri & Michael Keren & Giovanni B. Ramello & Vittorio Valli, 2009. "Publishing an E-Journal on a Shoe String: Is It a Sustainable Project?," Economic Analysis and Policy, Elsevier, vol. 39(1), pages 89-101, March.
    14. Bondonio, Daniele, 2009. "Impact identification strategies for evaluating business incentive programs," POLIS Working Papers 129, Institute of Public Policy and Public Choice - POLIS.
    15. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
    16. Michele Giuranno, 2009. "Pooling Sovereignty and Subsidiarity Principle," Discussion Papers 09/01, Department of Economics, University of York.

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