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Majority voting in a model of means testing

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  • Cardak, Buly A.
  • Glomm, Gerhard
  • Ravikumar, B.

Abstract

We study a model of endogenous means testing where households differ in their income and where the in-kind transfer received by each household declines with income. Majority voting determines the two dimensions of public policy: the size of the welfare program and the means-testing rate. We establish the existence of a sequential majority-voting equilibrium and show that the means-testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size. Furthermore, the set of subsidy recipients does not depend on households’ preferences, but depends only on income heterogeneity.

Suggested Citation

  • Cardak, Buly A. & Glomm, Gerhard & Ravikumar, B., 2020. "Majority voting in a model of means testing," European Economic Review, Elsevier, vol. 122(C).
    • Handle: RePEc:eee:eecrev:v:122:y:2020:i:c:s0014292119302120
    DOI: 10.1016/j.euroecorev.2019.103351
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    More about this item

    Keywords

    Sequential majority voting; Means testing; Political support; Targeting;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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