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A theory of ethnic diversity and income distribution: A legislative bargaining approach

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  • Tsuchimoto Menkyna, Fusako

Abstract

In this paper, I examine how the two dimensions of income inequality and ethnic diversity affect the formation of political coalitions and the reallocation of income. I construct a legislative bargaining model to analyze when coalitions form along the income dimension and when it forms along the ethnic dimension. The results of the model suggest that the agenda setter selects a partner with a lower aggregate income: a smaller population size and a lower income level. Further, I extend the model from a one-round to a two-round game. The extended model shows that forming an oversized coalition is a possible equilibrium outcome and is consistent with the empirical findings.

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  • Tsuchimoto Menkyna, Fusako, 2014. "A theory of ethnic diversity and income distribution: A legislative bargaining approach," European Journal of Political Economy, Elsevier, vol. 34(C), pages 52-67.
    • Handle: RePEc:eee:poleco:v:34:y:2014:i:c:p:52-67
    DOI: 10.1016/j.ejpoleco.2013.12.002
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    Cited by:

    1. Bleaney, Michael & Dimico, Arcangelo, 2016. "State history, historical legitimacy and modern ethnic diversity," European Journal of Political Economy, Elsevier, vol. 43(C), pages 159-170.

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    More about this item

    Keywords

    Political economy; Diversity; Legislative bargaining; Oversized coalition;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H4 - Public Economics - - Publicly Provided Goods

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