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Modelling the composition of government expenditure in democracies Author info | Abstract | Publisher info | Download info | Related research | Statistics Creedy, John
Moslehi, Solmaz
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This paper considers majority voting over the ratio of transfer payments to per capita expenditure on public goods. A model is constructed in which individuals vote for government expenditure on a public good, for a given income tax rate. Labour supply is endogenous. The equilibrium ratio of transfers to public good expenditure is a function of the ratio of median to mean wages and the tax rate. Cross-sectional regressions confirmed that reductions in the skewness of the wage rate distribution are associated with reductions in transfer payments relative to public goods expenditure, at a decreasing rate. Increases in the tax rate initially increase the importance of transfer payments but eventually tax rate increases lead to lower transfers.
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Article provided by Elsevier in its journal European Journal of Political Economy .
Volume (Year): 25 (2009)
Issue (Month): 1 (March)
Pages: 42-55
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Handle: RePEc:eee:poleco:v:25:y:2009:i:1:p:42-55Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544
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Keywords: Median voter Public goods Transfer payment ; Other versions of this item:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Tridimas, George & Winer, Stanley L., 2005.
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
John Creedy & Solmaz Moslehi, 2007.
"The Optimal Composition of Government Expenditure ,"
Department of Economics - Working Papers Series
1008, The University of Melbourne.
[Downloadable!]
John Creedy & Shuyun May Li & Solmaz Moslehi, 2008.
"The Composition of Government Expenditure in an Overlapping Generations Model ,"
Department of Economics - Working Papers Series
1043, The University of Melbourne.
[Downloadable!]
John Creedy & Solmaz Moslehi, 2008.
"Voting over Taxes and Expenditure: The Role of Home Production ,"
Department of Economics - Working Papers Series
1052, The University of Melbourne.
[Downloadable!]
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