A Theory of Ethnic Diversity and Income Distribution
In this paper, how the two dimensions of heterogeneity of people in society, income disparity and ethnic diversity, affect the reallocation of the income is examined. Specifically a legislative bargaining model is constructed to investigate how the political parties whose platforms are distinguished by ethnicity and income group, form a coalition and enter a government to implement their preferred fiscal policy is analyzed. The result of the model suggests, that the preferred partner for coalition is the group with smaller population size (cheaper to buy) and lower income level (easier to tax). Combined with the idea of Kuznets curve, this result suggests that in poor countries ethnic coalitions tend to occur and in the middle and high income countries, class coalitions are likely to occur. Further I extend the model such that the member in the coalition gets per-capita transfer equally to overcome the shortcomings of the conventional model. The extended model shows that if the rich is in the majority, forming an oversized coalition might be the optimal strategy, which is consistent with empirical findings in some developed countries, such as Denmark or Sweden.
|Date of creation:||Nov 2009|
|Contact details of provider:|| Postal: P.O. Box 882, Politickych veznu 7, 111 21 Praha 1|
Phone: (+420) 224 005 123
Fax: (+420) 224 005 333
Web page: http://www.cerge-ei.cz
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David P. Baron & Daniel Diermeier, 2001. "Elections, Governments, and Parliaments in Proportional Representation Systems," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 933-967.
- Timothy Besley & Stephen Coate, 1997.
"An Economic Model of Representative Democracy,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(1), pages 85-114.
- Tim Besley & Stephen Coate, . "An Economic Model of Representative Democracy," Penn CARESS Working Papers ecf70d639d700dba5327ab0c8, Penn Economics Department.
- Tim Besley & Stephen Coate, "undated". ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Raquel Fernández & Gilat Levy, 2005.
"Diversity and Redistribution,"
NBER Working Papers
11570, National Bureau of Economic Research, Inc.
- Daniel Diermeier & Antonio Merlo, 1998.
"Government Turnover in Parliamentary Democracies,"
1232, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Diermeier, Daniel & Merlo, Antonio, 1998. "Government Turnover in Parliamentary Democracies," Working Papers 98-31, C.V. Starr Center for Applied Economics, New York University.
- Diermeier, Daniel & Merlo, Antonio, 1998. "Government turnover in parliamentary democracies," Bulletins 7453, University of Minnesota, Economic Development Center.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
- Marina Azzimonti Renzo, 2004. "On the dynamic inefficiency of governments," 2004 Meeting Papers 228, Society for Economic Dynamics.
- Easterly, W & Levine, R, 1996.
"Africa's Growth Tragedy : Policies and Ethnic Divisions,"
536, Harvard - Institute for International Development.
- William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
- Patrick Bolton & Gérard Roland, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1057-1090.
When requesting a correction, please mention this item's handle: RePEc:cer:papers:wp395. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jana Koudelkova)
If references are entirely missing, you can add them using this form.