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Representation and regional redistribution in federations

  • Tiberiu Dragu

    ()

    (University of Illinois)

  • Jonathan Rodden

    ()

    (Stanford University)

This paper examines the role of institutions of territorial representation in shaping long-term patterns of inter-regional redistribution within federations. A simple legislative bargaining model with endogenous taxation suggests that over-represented states should be favored in the distribution of inter-governmental grants regardless of their income level. We demonstrate that a striking relationship between legislative representation and grants holds up in a diverse group of federations from around the world. The relationship appears not to be an artifact of economic development, population size, population density, or the historical conditions under which the federal bargain was struck. Furthermore, we suggest that the attractiveness of poor states as coalition partners implies that intergovernmental transfer systems will often tend toward progressivity under equal apportionment, but the systematic over-representation of wealthy (or poor) states can undermine (or bolster) this logic.

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File URL: http://ieb.ub.edu/aplicacio/fitxers/2010/5/Doc2010-16.pdf
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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/16.

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Length: 43 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:ieb:wpaper:2010/5/doc2010-16
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  1. Atlas, Cary M, et al, 1995. "Slicing the Federal Government Net Spending Pie: Who Wins, Who Loses, and Why," American Economic Review, American Economic Association, vol. 85(3), pages 624-29, June.
  2. Thiess Buettner & Fédéric Holm-Hadulla, 2008. "Cities in Fiscal Equalization," CESifo Working Paper Series 2447, CESifo Group Munich.
  3. Anderson, Gary M & Tollison, Robert D, 1991. "Congressional Influence and Patterns of New Deal Spending, 1933-1939," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 161-75, April.
  4. Hans Pitlik & Friedrich Schneider & Harald Strotmann, 2005. "Legislative Malapportionment and the Politicization of Germany’s Intergovernmental Transfer System," CESifo Working Paper Series 1426, CESifo Group Munich.
  5. James M. Snyder Jr. & Michael M. Ting & Stephen Ansolabehere, 2005. "Legislative Bargaining under Weighted Voting," American Economic Review, American Economic Association, vol. 95(4), pages 981-1004, September.
  6. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
  7. Hauk, William R. & Wacziarg, Romain, 2007. "Small States, Big Pork," Quarterly Journal of Political Science, now publishers, vol. 2(1), pages 95-106, March.
  8. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
  9. Brian Knight, 2004. "Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate," NBER Working Papers 10385, National Bureau of Economic Research, Inc.
  10. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
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