A Theory of Distributional Conflict, Voluntarism and Segregation
AbstractAlong with the rise in income inequality in the US, there is evidence of a simultaneous move toward fiscal devolution and increased government reliance on private provision of public goods. This Paper argues that these phenomena are related. We describe a model of jurisdiction and policy formation in which the structure of government provision is endogenous and public good provision levels are determined by a political process that can exploit private motives for voluntary giving. The model predicts that an increase in income inequality leads to decentralization, with local jurisdictions becoming more income-homogeneous than the population as a whole. This reduction in local income heterogeneity, combined with a reduced tax base, results in increased reliance by government on private provision.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3625.
Date of creation: Nov 2002
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- IgnatiusJ. Horstmann & KimberleyA. Scharf, 2008. "A Theory of Distributional Conflict, Voluntarism and Segregation," Economic Journal, Royal Economic Society, vol. 118(527), pages 427-453, 03.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
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