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Are Welfare Recipients Dictators in a Democracy? The Political economy of the Negative Income Tax

Author

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  • Philippe Penelle

Abstract

This paper examines the extent to which a democratic society characterized by an unequal distribution of income, is capable of transforming potential efficiency gains into actual economy-wide welfare gains. The model emphasizes the distortive effects of these potential efficiency gains on the price of the redistributive program faced at various income levels. These distorted prices in turn affect the voting behavior and equilibrium fiscal policy chosen by the people. (JEL H20, H3, H42).

Suggested Citation

  • Philippe Penelle, 1997. "Are Welfare Recipients Dictators in a Democracy? The Political economy of the Negative Income Tax," Working Papers 97-01, Harris School of Public Policy Studies, University of Chicago.
    • Handle: RePEc:har:wpaper:9701
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    File URL: http://harrisschool.uchicago.edu/about/publications/working-papers/pdf/wp_97_01.pdf
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    More about this item

    Keywords

    welfare; income redistribution; price distortion; fiscal policy; voting behavior; efficiency;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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