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Is a Uniform Social Policy Better? Fiscal Federalism and Factor Mobility

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  • Roberto Perotti

Abstract

This paper develops a two-country model to study two questions. How do the degrees of centralization of redistribution and of factor mobility affect the productive efficiency of the economies? What degrees of centralization of redistribution and of factor mobility are likely to be chosen by majority rule? The model shows that a system of centralized redistribution can lead to less efficient outcomes if labor or capital are not mobile; and an inefficient outcome, with incomplete or no factor mobility, receives a majority of votes in both countries, whenever the structure of labor markets is very different in the two countries.

Suggested Citation

  • Roberto Perotti, 2001. "Is a Uniform Social Policy Better? Fiscal Federalism and Factor Mobility," American Economic Review, American Economic Association, vol. 91(3), pages 596-610, June.
  • Handle: RePEc:aea:aecrev:v:91:y:2001:i:3:p:596-610 Note: DOI: 10.1257/aer.91.3.596
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    References listed on IDEAS

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    Cited by:

    1. George Economides & Apostolis Philippopoulos & Petros Varthalitis, 2016. "Monetary Union, Even Higher Integration, or Back to National Currencies?," CESifo Economic Studies, CESifo, vol. 62(2), pages 232-255.
    2. Bordignon, Massimo & Brusco, Sandro, 2006. "On enhanced cooperation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2063-2090, November.
    3. Bougheas, Spiros & Nelson, Doug, 2013. "On the political economy of high skilled migration and international trade," European Economic Review, Elsevier, vol. 63(C), pages 206-224.
    4. Padovano, Fabio, 2012. "The drivers of interregional policy choices: Evidence from Italy," European Journal of Political Economy, Elsevier, vol. 28(3), pages 324-340.

    More about this item

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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