IDEAS home Printed from https://ideas.repec.org/p/cjz/ca41cj/10.html
   My bibliography  Save this paper

Political competition and the (in)effectiveness of redistribution in a federation

Author

Abstract

We analyze political and economic conditions in which the effectiveness of public redistribution might be low in a federation. In our economy, the central government redistributes income while local governments provide a pro poor local public good. If local public spending falls as a response to the ex-post tax-transfer distribution of income engineered by the policy of the central government then public redistribution might be ineffective in redistributing welfare. In this paper we address this issue. Our main findings are: first, if the party of some local government represents a coalition of voters with labor earning abilities below the average earning ability of the economy and the aggregate net transfer from the redistributive program is negative for residents in the locality then local public spending falls in this district as a response to the redistributive policy of the central government. Second, if local governments of all districts are controlled by parties representing voters with sufficiently high marginal utilities of income and labor earning abilities below the nationwide average labor earning ability then public redistribution induces all local governments to reduce local public spending.

Suggested Citation

  • Ikuho Kochi & Raúl Ponce Rodríguez, 2012. "Political competition and the (in)effectiveness of redistribution in a federation," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. 10, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 09 Dec 2012.
  • Handle: RePEc:cjz:ca41cj:10
    as

    Download full text from publisher

    File URL: http://open-apps.uacj.mx/RePEc/cjz/ca41cj/Cuadernos%20UACJ%2010.pdf
    File Function: read
    Download Restriction: none

    References listed on IDEAS

    as
    1. Gravelle, Jane G & Kotlikoff, Laurence J, 1989. "The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 749-780, August.
    2. repec:cup:apsrev:v:67:y:1973:i:02:p:490-498_14 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Raúl A. Ponce Rodríguez & Ikuho Kochi & Luis E. Gutiérrez Casas, 2015. "The structure of political power and redistribution in economies with multiple governments," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 30(2), pages 269-303.

    More about this item

    Keywords

    Redistributive effects; state and local governments; fiscal policy and behavior of agents; elections;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cjz:ca41cj:10. 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: (Ph.D. Isaac Leobardo Sánchez Juárez). General contact details of provider: http://edirc.repec.org/data/dsacjmx.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.