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- Equilibrium In Mobility And Redistribution Models

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  • M. Socorro Puy

    (Universidad de Málaga)

Abstract

We develop a simple model in which individuals migrate freely among regions. In each region there is a majority voting procedure that determines a proportional taxation on earnings which finances a uniform transfer for each of the agents. Equilibrium requires that no one wishes to migrate and that the taxation policy be the result of majority voting in each region. In this setting Caplin and Nalebu (1997) show that there is no equilibrium, since all the agents want to live in a region where their income is below the mean income. Furthermore, we assume that in each region there is a competitive labor market that endogenously determines the wages. Then, if the agents when migrating take into account the taxation and the wages of each region, we find that equilibrium exists. This result is obtained for two diferent kinds of agents rationally: myopic and sophisticated agents.

Suggested Citation

  • M. Socorro Puy, 1999. "- Equilibrium In Mobility And Redistribution Models," Working Papers. Serie AD 1999-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1999-09
    as

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    References listed on IDEAS

    as
    1. Cremer, Helmuth & et al, 1996. "Mobility and Redistribution: A Survey," Public Finance = Finances publiques, , vol. 51(3), pages 325-352.
    2. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-774, September.
    3. Michael Waldman, 1984. "Worker Allocation, Hierarchies and the Wage Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 95-109.
    4. Rose-Ackerman, Susan, 1979. "Market models of local government: Exit, voting, and the land market," Journal of Urban Economics, Elsevier, vol. 6(3), pages 319-337, July.
    Full references (including those not matched with items on IDEAS)

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