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Political Geography and Income Inequalities

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Author Info
Filippo Gregorini () (DISCE, Università Cattolica; DEFAP, Università Cattolica)

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Abstract

This paper studies the effect of the introduction of income inequalities in a model of geopolitical organization. We assume the existence of two groups of agents with different incomes. We focus on the policy effects of changes in income differential between the groups and changes in the fraction of the population belonging to the two groups. In the optimal solution, if size is endogenous and public good provision exogenous size increases as income inequality increases; if both size and public good provision are endogenously determined size is neutral to changes in income inequalities and public good provision decreases as inequality increases. There are cases where a stable solution does not exist and the possibility of non existence increases together with inequality, if both size and public good provision are endogenously determined.

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File URL: http://www.unicatt.it/Istituti/TeoriaEconomica/Quaderni/itemq0746.pdf
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Publisher Info
Paper provided by Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) in its series DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi with number itemq0746.

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Length: 27 pages
Date of creation: Sep 2007
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Handle: RePEc:ctc:serie6:itemq0746

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Related research
Keywords: Country Size Public Good Income Inequality Tax Distortion

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Find related papers by JEL classification:
D6 - Microeconomics - - Welfare Economics
H4 - Public Economics - - Publicly Provided Goods
D3 - Microeconomics - - Distribution
H2 - Public Economics - - Taxation, Subsidies, and Revenue

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