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Heterogeneous preferences and in-kind redistribution: Theory and evidence

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  • Bellani, Luna
  • Scervini, Francesco

Abstract

This paper examines the impact of social heterogeneity on in-kind redistribution. We contribute to the previous literature in two ways: we consider (i) the provision of several public goods and (ii) agents different not only in income, but also in their preferences over the various goods provided by the public sector. In this setting, both the distribution and size of goods provision depend on the heterogeneity of preferences. Our main result is that preference heterogeneity tends to decrease in-kind redistribution, while income inequality tends to increase it. An empirical investigation based on United States Census Bureau data confirms these theoretical findings.

Suggested Citation

  • Bellani, Luna & Scervini, Francesco, 2015. "Heterogeneous preferences and in-kind redistribution: Theory and evidence," European Economic Review, Elsevier, vol. 78(C), pages 196-219.
  • Handle: RePEc:eee:eecrev:v:78:y:2015:i:c:p:196-219
    DOI: 10.1016/j.euroecorev.2015.06.001
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    Cited by:

    1. Holm, Joshua, 2016. "A model of redistribution under social identification in heterogeneous federations," Journal of Public Economics, Elsevier, vol. 143(C), pages 39-48.
    2. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo Group Munich.

    More about this item

    Keywords

    Heterogeneous preferences; In-kind redistribution; Voting; Social distance; Local public budgets;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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