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The New Federalism: Distributional Conflict, Voluntarism and Segregation

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Author Info
Horstmann, Ignatius J
Scharf, Kimberley Ann

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Abstract

This paper examines a model of jurisdiction formation where individuals differ in both income and preferences, and where public provision choices within jurisdictions are the outcome of a political process, but can be supplemented by private contributions. Locational equilibria in this model can feature inefficient segregation along income lines, which is more likely to occur the larger is income heterogeneity. Furthermore, the model predicts that an increase in income heterogeneity can be accompanied by an increase in private provision. This prediction squares with the observed correlation in the U.S. between rising income inequality on the one hand, and recent trends towards fiscal devolution and privatization on the other.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2273.

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Date of creation: Oct 1999
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Handle: RePEc:cpr:ceprdp:2273

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Related research
Keywords: Fiscal Federalism; Jurisdiction Formation; Private Provision Of Public Goods;

Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue
H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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.:

  1. Hamilton, Bruce W, 1976. "The Effects of Property Taxes and Local Public Spending on Property Values: A Theoretical Comment," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 647-50, June. [Downloadable!] (restricted)
  2. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-93, September. [Downloadable!] (restricted)
  3. Bolton, Patrick & Roland, Gerard, 1996. "Distributional Conflicts, Factor Mobility, and Political Integration," American Economic Review, American Economic Association, vol. 86(2), pages 99-104, May. [Downloadable!] (restricted)
  4. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
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  5. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December. [Downloadable!] (restricted)
  6. Brueckner, Jan K., 1979. "Property values, local public expenditure and economic efficiency," Journal of Public Economics, Elsevier, vol. 11(2), pages 223-245, March. [Downloadable!] (restricted)
  7. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February. [Downloadable!] (restricted)
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  8. Goodspeed, Timothy J., 1995. "Local income taxation: An externality, Pigouvian solution, and public policies," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 279-296, June. [Downloadable!] (restricted)
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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.)

  1. Michele Giuseppe Giuranno, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 603, University of Essex, Department of Economics. [Downloadable!]
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