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Redistribution Policy: A European Model


  • Casella, Alessandra


Following the rationale for regional redistribution programmes described in the official documents of the European Union, this Paper studies a very simple multi-country model built around two regions: a core and a periphery. Technological spillovers link firms’ productivity in each of the two region, and each country’s territory falls partly in the core and partly in the periphery, but the exact shares vary across countries. We find that, in line with the EU view, the efficient regional allocation requires both national and international transfers. If migration is fully free across all borders, then optimal redistribution policy results from countries’ uncoordinated policies, obviating the need for a central agency. But if countries have the option of setting even imperfect border barriers, then efficiency is likely to require coordination on both barriers and international transfers (both of which will be set optimally at positive levels). The need for coordination increases as the Union increases in size.

Suggested Citation

  • Casella, Alessandra, 2002. "Redistribution Policy: A European Model," CEPR Discussion Papers 3620, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3620

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    References listed on IDEAS

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    Cited by:

    1. Arcalean, Calin & Glomm, Gerhard & Schiopu, Ioana, 2012. "Growth effects of spatial redistribution policies," Journal of Economic Dynamics and Control, Elsevier, vol. 36(7), pages 988-1008.
    2. Nikolaj Malchow-Møller & Jakob Munch & Sanne Schroll & Jan Skaksen, 2009. "Explaining Cross-Country Differences in Attitudes Towards Immigration in the EU-15," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 91(3), pages 371-390, May.
    3. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 681-703, September.
    4. Giordani, Paolo E. & Ruta, Michele, 2013. "Coordination failures in immigration policy," Journal of International Economics, Elsevier, vol. 89(1), pages 55-67.
    5. Neumann, Michael & Berthold, Norbert, 2004. "Europäische Strukturpolitik - Gift für rückständige Regionen?," Discussion Paper Series 74, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    6. Jesus Fernandez-Huertas Moraga, 2008. "A General Model of Bilateral Migration Agreements," Working Papers 360, Barcelona Graduate School of Economics.
    7. Paolo E Giordani & Michele Ruta, 2008. "Prejudice and Immigration," Levine's Working Paper Archive 122247000000002276, David K. Levine.
    8. Achim Kemmerling, 2003. "Regional Input on the Social Dimension of Ezoneplus: Belgium, The Netherlands, France, Austria, and Germany," Eastward Enlargement of the Euro-zone Working Papers wp13c, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Mar 2003.
    9. Seelkopf, Laura & Yang, Hongyan, 2014. "European fiscal solidarity: An EU-wide optimal income tax approach," TranState Working Papers 185, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    10. Rahel Falk & Werner Hölzl & Hannes Leo, 2007. "On the Roles and Rationales of European STI Policies," WIFO Working Papers 299, WIFO.
    11. Norbert Berthold & Michael Neumann, 2005. "Zahlt Deutschland drauf? - Was die Neue Ökonomische Geographie der deutschen Politik für die Verhandlungen um den europäischen Etat mit auf den Weg geben kann," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(10), pages 16-22, May.
    12. Hanns-Dieter Jacobsen et. al, 2004. "Economic, Political, Institutional as well as Social Risks and Opportunities of EMU Enlargement," Eastward Enlargement of the Euro-zone Working Papers wp22, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jun 2004.
    13. Chetan Ghate & Gerhard Glomm & Jialu Liu, 2012. "Sectoral infrastructure investment in an unbalanced growing economy: The Case of India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 12-07, Indian Statistical Institute, New Delhi, India.

    More about this item


    economic integration; enlargement; European Union; migration; structural funds;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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