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Do Remittances Crowd Out The Government¡¯S Redistributive Policy?

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Author Info

  • Ikuho Kochi

    ()
    (Universidad Autonoma de Ciudad Juarez)

  • Raul Alberto Ponce Rodriguez

    ()
    (Universidad Autonoma de Ciudad Juarez)

Abstract

In this paper, we develop a political economy model with a voting equilibrium to analyze the impact of remittances in the government¡¯s redistributive policy. Remittances affect the distribution of income and the households¡¯ demand for public redistribution. In this paper we consider the impact of remittances on two types of redistributive programs: a universal and a targeted transfer program. For an economy with targeted public transfers, we identify conditions in which an increase in remittances crowds out the social transfers of the government. If the redistributive program is universal then an increase in remittances actually increases the size of the government¡¯s transfers.

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Bibliographic Info

Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 35 (2010)
Issue (Month): 4 (December)
Pages: 45-72

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Handle: RePEc:jed:journl:v:35:y:2010:i:4:p:45-72

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Related research

Keywords: Redistribution; Performance of Government; Electoral Competition; Political Economy; Remittances;

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  1. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  2. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
  3. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  4. Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February.
  5. Aidt, T.S. & Dutta, Jayasri & Loukoianova, Elena, 2006. "Democracy comes to Europe: Franchise extension and fiscal outcomes 1830-1938," European Economic Review, Elsevier, vol. 50(2), pages 249-283, February.
  6. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 651-78, August.
  7. Roberts, Russell D, 1984. "A Positive Model of Private Charity and Public Transfers," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 136-48, February.
  8. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926.
  9. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, October.
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Cited by:
  1. Moises Neil V. Serino & Donghun Kim, 2011. "How Do International Remittances Affect Poverty In Developing Countries? A Quantile Regression Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(4), pages 17-40, December.

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