Income Inequality and the Size of the Public Sector
AbstractThis paper focuses on the question of how income inequality between two jurisdictions impacts upon government decision-making affecting the size of the public sector. We model policy choices as the outcome of regional representatives' negotiations in the legislature. We show that the more unequal income distribution is, the greater the degree of inefficiency in terms of under-provision of public goods. Particularly, a divergent income trend between rich and poor makes interregional redistributive conflicts more dramatic. Consequently, the larger the income disparity, the smaller the public sector. A wealthier economy as a result may lead to a relatively smaller public sector when income disparity increases.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 603.
Date of creation: 07 Nov 2005
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-20 (All new papers)
- NEP-PBE-2005-11-20 (Public Economics)
- NEP-POL-2005-12-22 (Positive Political Economics)
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.:
- Jaramillo, Fernando & Kempf, Hubert & Moizeau, Fabien, 2003.
"Inequality and club formation,"
Journal of Public Economics,
Elsevier, vol. 87(5-6), pages 931-955, May.
- Jaramillo, F. & Kempf, H. & Moizeau, F., 2000. "Inequality and Club Formation," Papiers d'Economie MathÃÂ©matique et Applications 2000.36, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Kristov, Lorenzo & Lindert, Peter & McClelland, Robert, 1992.
"Pressure groups and redistribution,"
Journal of Public Economics,
Elsevier, vol. 48(2), pages 135-163, July.
- Tridimas, George & Winer, Stanley L., 2005. "The political economy of government size," European Journal of Political Economy, Elsevier, vol. 21(3), pages 643-666, September.
- repec:ebl:ecbull:v:28:y:2002:i:13:p:a0 is not listed on IDEAS
- Kjetil Bjorvatn & Alexander W. Cappelen, 2003. "Redistributive Tax Policies and Inequality: An Assessment of Recent Country Comparative Studies," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(1), pages 28-31, 02.
- Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March.
- Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, October.
- Bjorvatn, K. & Cappelen, A.W., 2000.
"Inequality, Segregation, and Redistribution,"
13/00, Norwegian School of Economics and Business Administration-.
- Vander Lucas, 2002. "Fiscal federalism and bargaining over transfers," Economics Bulletin, AccessEcon, vol. 28(13), pages A0.
- Persson, Mats, 1995. " Why Are Taxes So High in Egalitarian Societies?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 569-80, December.
- Bassett, William F. & Burkett, John P. & Putterman, Louis, 1999. "Income distribution, government transfers, and the problem of unequal influence," European Journal of Political Economy, Elsevier, vol. 15(2), pages 207-228, June.
- Horstmann, Ignatius J & Scharf, Kimberley Ann, 1999. "The New Federalism: Distributional Conflict, Voluntarism and Segregation," CEPR Discussion Papers 2273, C.E.P.R. Discussion Papers.
- Michele Giuranno, 2009. "Pooling Sovereignty and Subsidiarity Principle," Discussion Papers 09/01, Department of Economics, University of York.
- Giuranno, Michele, 2008.
"Regional income disparity and the size of the Public Sector,"
POLIS Working Papers
114, Institute of Public Policy and Public Choice - POLIS.
- Michele Giuseppe Giuranno, 2009. "Regional Income Disparity and the Size of the Public Sector," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 697-719, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Essex Economics Web Manager).
If references are entirely missing, you can add them using this form.