Representation and regional redistribution in federations
AbstractThis paper examines the role of institutions of territorial representation in shaping long-term patterns of inter-regional redistribution within federations. A simple legislative bargaining model with endogenous taxation suggests that over-represented states should be favored in the distribution of inter-governmental grants regardless of their income level. We demonstrate that a striking relationship between legislative representation and grants holds up in a diverse group of federations from around the world. The relationship appears not to be an artifact of economic development, population size, population density, or the historical conditions under which the federal bargain was struck. Furthermore, we suggest that the attractiveness of poor states as coalition partners implies that intergovernmental transfer systems will often tend toward progressivity under equal apportionment, but the systematic over-representation of wealthy (or poor) states can undermine (or bolster) this logic.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/16.
Length: 43 pages
Date of creation: 2010
Date of revision:
Redistribution; federalism; intergovernmental transfers; malapportionment;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-15 (All new papers)
- NEP-GEO-2010-05-15 (Economic Geography)
- NEP-POL-2010-05-15 (Positive Political Economics)
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