Redistribution policy: A European model
AbstractFollowing the rationale for regional redistribution programs described in the official documents of the European Union, this paper studies a very simple multi-country model built around two regions: a core and a periphery. Technological spill-overs link firms' productivity in each of the two regions, and each country's territory falls partly in the core and partly in the periphery, but the exact shares vary across countries. We find that, in line with the EU view, the efficient regional allocation requires both national and international transfers. If migration is fully free across all borders, then optimal redistribution policy results from countries' uncoordinated policies, obviating the need for a central agency. But if countries have the option of setting even imperfect border barriers, then efficiency is likely to require coordination on both barriers and international transfers (both of which will be set optimally at positive levels). The need for coordination increases as the Union increases in size.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 89 (2005)
Issue (Month): 7 (July)
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Web page: http://www.elsevier.com/locate/inca/505578
Other versions of this item:
- Alessandra Casella, 2002. "Redistribution Policy: A European Model," NBER Working Papers 9258, National Bureau of Economic Research, Inc.
- Casella, Alessandra, 2002. "Redistribution Policy: A European Model," CEPR Discussion Papers 3620, C.E.P.R. Discussion Papers.
- Alessandra Casella, 2002. "Redistribution policy: A European model," Discussion Papers 0203-06, Columbia University, Department of Economics.
- F2 - International Economics - - International Factor Movements and International Business
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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