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Skill distributions and the compatibility between mobility and redistribution

  • Puy, M. Socorro

We study to what extend in a Tiebout economy, the exogenous distribution of skill across agents affects the compatibility between mobility an redistribution. We propose a two-region economy where: i) each region redistributive policy is elected by majority rule (where both cases: myopic and sophisticated voters are considered), and ii) each region wage is endogenously determined by a separated labor market. We find that the compatibility between mobility and redistribution can be guaranteed when either there is a low-skilled region where the median skilled agent is below the mean skill of the region, or/and when there is a high-skilled region where the median skilled agent is above the mean skill of the region.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 37 (2007)
Issue (Month): 3 (May)
Pages: 345-362

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Handle: RePEc:eee:regeco:v:37:y:2007:i:3:p:345-362
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  1. Nico A. Hansen & Anke S. Kessler, 2001. "The Political Geography of Tax H(e)avens and Tax Hells," American Economic Review, American Economic Association, vol. 91(4), pages 1103-1115, September.
  2. HINDRIKS, Jean, . "Mobility and redistributive politics," CORE Discussion Papers RP -1536, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Gans, Joshua S. & Smart, Michael, 1996. "Majority voting with single-crossing preferences," Journal of Public Economics, Elsevier, vol. 59(2), pages 219-237, February.
  4. Nalebuff, B. & Caplin, A., 1992. "Competition Among Institutions," Discussion Papers 1992_36, Columbia University, Department of Economics.
  5. Rose-Ackerman, Susan, 1979. "Market models of local government: Exit, voting, and the land market," Journal of Urban Economics, Elsevier, vol. 6(3), pages 319-337, July.
  6. Epple, Dennis & Filimon, Radu & Romer, Thomas, 1984. "Equilibrium among local jurisdictions: toward an integrated treatment of voting and residential choice," Journal of Public Economics, Elsevier, vol. 24(3), pages 281-308, August.
  7. M. Socorro Puy, 2003. "External Equilibrium in Mobility and Redistribution Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 363-379, 04.
  8. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  9. Grandmont, Jean-Michel, 1978. "Intermediate Preferences and the Majority Rule," Econometrica, Econometric Society, vol. 46(2), pages 317-30, March.
  10. Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
  11. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  12. Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
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