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Redistribution Policy: A European Model

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Casella, Alessandra

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Abstract

Following the rationale for regional redistribution programmes 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 spillovers link firms’ productivity in each of the two region, 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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3620.

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Date of creation: Nov 2002
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Handle: RePEc:cpr:ceprdp:3620

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Related research
Keywords: economic integration; enlargement; European Union; migration; structural funds;

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Find related papers by JEL classification:
F20 - International Economics - - International Factor Movements and International Business - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

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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. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March. [Downloadable!] (restricted)
    Other versions:
  2. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Rodrik, Dani, 2002. "Feasible Globalizations," Working Paper Series rwp02-029, Harvard University, John F. Kennedy School of Government. [Downloadable!]
    Other versions:
  4. Shlomo Weber & Michel Le Breton, 2001. "The Art of Making Everybody Happy: How to Prevent a Secession," IMF Working Papers 01/176, International Monetary Fund. [Downloadable!]
  5. Jean Hindriks & Gareth D. Myles, 2003. "Strategic Inter-Regional Transfers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 229-248, 04. [Downloadable!] (restricted)
    Other versions:
  6. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April. [Downloadable!] (restricted)
  7. Diego Puga, 2000. "European regional policy in light of recent location theories," Working Papers dpuga-00-02, University of Toronto, Department of Economics. [Downloadable!]
  8. LE BRETON, Michel & WEBER, Shlomo, 2001. "The art of making everybody happy: how to prevent a secession," CORE Discussion Papers 2001011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  9. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-33, November. [Downloadable!] (restricted)
  10. Bolton, Patrick & Roland, Gerard, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1057-90, November.
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  11. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September. [Downloadable!] (restricted)
  12. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October. [Downloadable!] (restricted)
  13. HINDRIKS, Jean & MYLES, Gareth D., 2001. "Strategic inter-regional transfers," CORE Discussion Papers 2001004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  14. Overman, Henry G. & Puga, Diego, 1999. "Unemployment Clusters Across European Regions and Countries," CEPR Discussion Papers 2255, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  15. Piketty, Thomas, 1996. "A federal voting mechanism to solve the fiscal-externality problem," European Economic Review, Elsevier, vol. 40(1), pages 3-17, January. [Downloadable!] (restricted)
  16. Inman, Robert P. & Rubinfeld, Daniel L., 1996. "Designing tax policy in federalist economies: An overview," Journal of Public Economics, Elsevier, vol. 60(3), pages 307-334, 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. Ugo Fratesi, 2004. "Regional policy from a supra-regional perspective," ERSA conference papers ersa04p509, European Regional Science Association. [Downloadable!]
    Other versions:
  2. Paolo E Giordani & Michele Ruta, 2008. "Prejudice and Immigration," Levine's Bibliography 122247000000002276, UCLA Department of Economics. [Downloadable!]
  3. Jesús Fernández-Huertas Moraga, 2008. "A General Model of Bilateral Migration Agreements," UFAE and IAE Working Papers 755.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  4. Achim Kemmerling, 2003. "Regional Input on the Social Dimension of Ezoneplus: Belgium, The Netherlands, France, Austria, and Germany," Eastward Enlargement of the Euro-zone Working Papers wp13c, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Mar 2003. [Downloadable!]
  5. Calin Arcalean & Gerhard Glomm & Ioana Schiopu, 2007. "Growth Effects of Spatial Redistribution Policies," Caepr Working Papers 2007-002, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
  6. Hanns-Dieter Jacobsen et. al, 2004. "Economic, Political, Institutional as well as Social Risks and Opportunities of EMU Enlargement," Eastward Enlargement of the Euro-zone Working Papers wp22, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jun 2004. [Downloadable!]
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