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Regional income disparity and the size of the Public Sector

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  • Giuranno, Michele

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Abstract

This 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 inter-regional income distribution is, the greater the under-provision of public goods. Particularly, larger inter-regional income disparity leads to a smaller public sector. A wealthier economy as a result may have a relatively smaller government size when income disparity increases.

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File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/giuranno126.pdf
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Bibliographic Info

Paper provided by Institute of Public Policy and Public Choice - POLIS in its series POLIS Working Papers with number 114.

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Length: 26 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:uca:ucapdv:114

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References

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  1. Persson, Mats, 1995. " Why Are Taxes So High in Egalitarian Societies?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 569-80, December.
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  6. Bjorvatn, K. & Cappelen, A.W., 2000. "Inequality, Segregation, and Redistribution," Papers 13/00, Norwegian School of Economics and Business Administration-.
  7. Lockwood, Ben, 1998. "Distributive Politics and the Costs of Centralization," CEPR Discussion Papers 2046, C.E.P.R. Discussion Papers.
  8. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
  9. 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.
  10. Jaramillo, F. & Kempf, H. & Moizeau, F., 2000. "Inequality and Club Formation," Papiers d'Economie Mathématique et Applications 2000.36, Université Panthéon-Sorbonne (Paris 1).
  11. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
  12. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  13. Allan Meltzer & Scott Richard, 1983. "Tests of a rational theory of the size of government," Public Choice, Springer, vol. 41(3), pages 403-418, January.
  14. repec:ebl:ecbull:v:28:y:2002:i:13:p:a0 is not listed on IDEAS
  15. Vander Lucas, 2002. "Fiscal federalism and bargaining over transfers," Economics Bulletin, AccessEcon, vol. 28(13), pages A0.
  16. Michele Giuseppe Giuranno, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 603, University of Essex, Department of Economics.
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Citations

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Cited by:
  1. Michele Giuranno, 2009. "Pooling Sovereignty and Subsidiarity Principle," Discussion Papers 09/01, Department of Economics, University of York.
  2. Bondonio, Daniele, 2009. "Impact identification strategies for evaluating business incentive programs," POLIS Working Papers 129, Institute of Public Policy and Public Choice - POLIS.
  3. Fabio Fiorillo & Agnese Sacchi, 2012. "The Political Economy of the Standard Level of Services: The Role of Income Distribution," CESifo Working Paper Series 3696, CESifo Group Munich.
  4. Orso, Cristina Elisa, 2009. "Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market," POLIS Working Papers 135, Institute of Public Policy and Public Choice - POLIS.
  5. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
  6. Privileggi, Fabio, 2008. "On the transition dynamics in endogenous recombinant growth models," POLIS Working Papers 120, Institute of Public Policy and Public Choice - POLIS.
  7. Giuranno, Michele G., 2010. "Pooling sovereignty under the subsidiary principle," European Journal of Political Economy, Elsevier, vol. 26(1), pages 125-136, March.
  8. Cavaleri, Pietro & Keren, Michael & Ramello, Giovanni B. & Valli, Vittorio, 2009. "Publishing an E-journal on a shoe string: Is it a sustainaible project?," POLIS Working Papers 118, Institute of Public Policy and Public Choice - POLIS.
  9. Giuranno, Michele G. & Rongili, Biswas, 2012. "Inter-jurisdictional migration and the size of government," MPRA Paper 42604, University Library of Munich, Germany.
  10. Giuranno, Michele, 2009. "The logic of party coalitions with political activism and public financing," POLIS Working Papers 134, Institute of Public Policy and Public Choice - POLIS.

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