Mobility and Redistributive Politics
AbstractThere is a widespread concern that a greater mobility of individuals can undermine any attempt to redistribute income at the local level. In this paper we derive the equilibrium level of redistribution when both the rich and the poor are mobile (although in different degrees) and when each jurisdiction chooses its redistributive policy by majority voting. This leads to a fundamental interaction whereby the policy choices of jurisdictions determine who they attract, and who they attract determines their policy choices. Our main findings are twofold. First, we show that a greater mobility of the poor can increase the equilibrium amount of redistribution. Second, we find that some jurisdictions can be stuck in equilibrium on the RwrongS side of their Laffer curve. The reason is that the poor are in a majority in these jurisdictions and they oppose to a potentially Pareto improving tax reduction because it would attract the rich and shift the majority.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 9915.
Length: 20 pages
Date of creation: 1999
Date of revision:
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SOCIAL CHOICE ; VOTING ; GOVERNMENT;
Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
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