IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/2273.html
   My bibliography  Save this paper

The New Federalism: Distributional Conflict, Voluntarism and Segregation

Author

Listed:
  • Horstmann, Ignatius J
  • Scharf, Kimberley

Abstract

This paper examines a model of jurisdiction formation where individuals differ in both income and preferences, and where public provision choices within jurisdictions are the outcome of a political process, but can be supplemented by private contributions. Locational equilibria in this model can feature inefficient segregation along income lines, which is more likely to occur the larger is income heterogeneity. Furthermore, the model predicts that an increase in income heterogeneity can be accompanied by an increase in private provision. This prediction squares with the observed correlation in the U.S. between rising income inequality on the one hand, and recent trends towards fiscal devolution and privatization on the other.

Suggested Citation

  • Horstmann, Ignatius J & Scharf, Kimberley, 1999. "The New Federalism: Distributional Conflict, Voluntarism and Segregation," CEPR Discussion Papers 2273, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2273
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2273
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1027-1056.
    2. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December.
    3. Brueckner, Jan K., 1979. "Property values, local public expenditure and economic efficiency," Journal of Public Economics, Elsevier, vol. 11(2), pages 223-245, March.
    4. Bolton, Patrick & Roland, Gerard, 1996. "Distributional Conflicts, Factor Mobility, and Political Integration," American Economic Review, American Economic Association, vol. 86(2), pages 99-104, May.
    5. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    6. Hamilton, Bruce W, 1976. "The Effects of Property Taxes and Local Public Spending on Property Values: A Theoretical Comment," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 647-650, June.
    7. Glomm, Gerhard & Lagunoff, Roger, 1998. "A Tiebout theory of public vs private provision of collective goods," Journal of Public Economics, Elsevier, vol. 68(1), pages 91-112, April.
    8. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-793, September.
    9. Goodspeed, Timothy J., 1995. "Local income taxation: An externality, Pigouvian solution, and public policies," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 279-296, June.
    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. Bjorvatn, K. & Cappelen, A. W., 2003. "Inequality, segregation, and redistribution," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1657-1679, August.
    2. Giuranno, Michele Giuseppe, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 8895, University of Essex, Department of Economics.
    3. Benoît LE MAUX & Kristýna DOSTÁLOVÁ & Fabio PADOVANO, 2017. "Ideology and Public Policies: A Quasi-Experimental Test of the Hypothesis that Left-Wing Governments Spend More," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2017-01-ccr, Condorcet Center for political Economy.
    4. Kjetil Bjorvatn & Alexander W. Cappelen, 2003. "Redistributive Tax Policies and Inequality: An Assessment of Recent Country Comparative Studies," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(1), pages 28-31, 02.
    5. Benoît Le Maux & Kristýna Dostálová & Fabio Padovano, 2020. "Ideology or voters? A quasi-experimental test of why left-wing governments spend more," Public Choice, Springer, vol. 182(1), pages 17-48, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ignatius J. Horstmann & Kimberley A. Scharf, 2008. "A Theory of Distributional Conflict, Voluntarism and Segregation," Economic Journal, Royal Economic Society, vol. 118(527), pages 427-453, March.
    2. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    3. Byron F. Lutz, 2009. "Fiscal amenities, school finance reform and the supply side of the Tiebout market," Finance and Economics Discussion Series 2009-18, Board of Governors of the Federal Reserve System (U.S.).
    4. Lang, Kevin & Jian, Tianlun, 2004. "Property taxes and property values: evidence from Proposition," Journal of Urban Economics, Elsevier, vol. 55(3), pages 439-457, May.
    5. Sacks, Michael, 2021. "Incentives for the over-provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 197-213.
    6. Hilber, Christian A. L., 2011. "The economics implications of house price capitalization a survey of an emerging literature," LSE Research Online Documents on Economics 58596, London School of Economics and Political Science, LSE Library.
    7. Barrow, Lisa & Rouse, Cecilia Elena, 2004. "Using market valuation to assess public school spending," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1747-1769, August.
    8. Amihai Glazer, 2014. "The Profit-maximizing Non-profit," Working Papers 131404, University of California-Irvine, Department of Economics.
    9. Cornes Richard & Sandler Todd, 2000. "Pareto-Improving Redistribution and Pure Public Goods," German Economic Review, De Gruyter, vol. 1(2), pages 169-186, May.
    10. Bartels, Lara & Kesternich, Martin, 2022. "Motivate the crowd or crowd- them out? The impact of local government spending on the voluntary provision of a green public good," ZEW Discussion Papers 22-040, ZEW - Leibniz Centre for European Economic Research.
    11. Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.
    12. Ben Lockwood, 2008. "Voting, Lobbying, And The Decentralization Theorem," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 416-431, November.
    13. Sung Hoon Kang & Mark Skidmore & Laura Reese, 2015. "The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 300-333, June.
    14. Ahmed Mahmud, 2011. "The creation of multi-ethnic nations with or without a core region," Public Choice, Springer, vol. 147(3), pages 359-376, June.
    15. Leslie M. Marx & Steven A. Matthews, 2000. "Dynamic Voluntary Contribution to a Public Project," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 327-358.
    16. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
    17. Alexia Gaudeul, 2008. "Consumer Welfare and Market Structure in a Model of Competition between Open Source and Proprietary Software," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2008-31, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    18. Michel Le Breton & Shlomo Weber, 2003. "The Art of Making Everybody Happy: How to Prevent a Secession," IMF Staff Papers, Palgrave Macmillan, vol. 50(3), pages 1-4.
    19. Grodecka, Anna & Hull, Isaiah, 2019. "The Impact of Local Taxes and Public Services on Property Values," Working Paper Series 374, Sveriges Riksbank (Central Bank of Sweden).
    20. Fraser, Clive D., 2000. "When Is Efficiency Separable from Distribution in the Provision of Club Goods?," Journal of Economic Theory, Elsevier, vol. 90(2), pages 204-221, February.

    More about this item

    Keywords

    Fiscal Federalism; Jurisdiction Formation; Private Provision Of Public Goods;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

    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:cpr:ceprdp:2273. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.