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Why Do Voters Demand Universal Government Benefits?

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  • Filip Palda

    (École nationale d'administration publique)

Abstract

Universal social benefits seem to contradict important notions in economics. They are poorly targeted and must be paid for by what seem to be high taxes. This paper describes the costs of universality and then proposes two competing explanations for why an electorate might wish to pay these costs. It may be harder to identify the poor through targeted social programs than to simply give everyone social benefits and withdraw part of these benefits through the tax system. Or, universality may be a form of political insurance that protects any one group of voters from being exploited by others. Each conjecture leads to different predictions about the manner in which government benefits will vary with the incomes of the recipients. I use a model of tax and spending incidence for Canada in 1990 to see which conjecture helps best to understand the data. I find mixed evidence in favor of the notion that universality is a form of political insurance.

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File URL: http://128.118.178.162/eps/pe/papers/0503/0503009.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0503009.

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Length: 26 pages
Date of creation: 30 Mar 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0503009

Note: Type of Document - pdf; pages: 26
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Web page: http://128.118.178.162

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Keywords: fiscal churning; political efficiency; transfers; Canada;

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  1. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, vol. 80(1), pages 37-49, March.
  2. Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 327-61, May.
  3. Dodge, David A, 1975. "Impact of Tax, Transfer and Expenditure Policies of Government on the Distribution of Personal Income in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 21(1), pages 1-52, March.
  4. Ludger Schuknecht & Vito Tanzi, 1995. "The Growth of Government and the Reform of the State in Industrial Countries," IMF Working Papers 95/130, International Monetary Fund.
  5. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-20, November.
  6. Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-94, November.
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Cited by:
  1. Palda, Filip, 1997. "Fiscal Churning and Political Efficiency," Kyklos, Wiley Blackwell, vol. 50(2), pages 189-206.

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