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Formation of Nations in a Welfare-State Minded World

  • Dagan, Nir
  • Volij, Oscar

We model the endogenous formation of nations in a world economy where nations apply redistributive policies. We show that people's preference for stronger redistributive policies may lead to greater inequality in the world's distribution of income as a result of rich individuals tending to form their own nations. By the same token, stable economic integration occurs only when redistributive policies are not too strong. Copyright 2000 by Blackwell Publishing Inc.

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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 2 (2000)
Issue (Month): 2 ()
Pages: 157-81

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Handle: RePEc:bla:jpbect:v:2:y:2000:i:2:p:157-81
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