IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/9258.html
   My bibliography  Save this paper

Redistribution Policy: A European Model

Author

Listed:
  • Alessandra Casella

Abstract

Following the rationale for regional redistribution programs 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 spill-overs link firms' productivity in each of the two regions, 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

  • Alessandra Casella, 2002. "Redistribution Policy: A European Model," NBER Working Papers 9258, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9258
    Note: ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w9258.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. John B. Burbidge & Gordon M. Myers, 1994. "Redistribution within and across the Regions of a Federation," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 620-636, August.
    2. Gordon M. Myers & Yorgos Y. Papageorgiou, 2002. "Towards a Better System for Immigration Control," Journal of Regional Science, Wiley Blackwell, vol. 42(1), pages 51-74.
    3. Rodrik, Dani, 2002. "Feasible Globalizations," CEPR Discussion Papers 3524, C.E.P.R. Discussion Papers.
    4. Jean Hindriks & Gareth D. Myles, 2003. "Strategic Inter-Regional Transfers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 229-248, April.
    5. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
    6. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-633, November.
    7. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August.
    8. Henry G. Overman & Diego Puga, 2002. "Unemployment clusters across Europe's regions and countries," Economic Policy, CEPR;CES;MSH, vol. 17(34), pages 115-148, April.
    9. Patrick Bolton & Gérard Roland, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1057-1090.
    10. Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
    11. Inman, Robert P. & Rubinfeld, Daniel L., 1996. "Designing tax policy in federalist economies: An overview," Journal of Public Economics, Elsevier, vol. 60(3), pages 307-334, June.
    12. 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.
    13. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    14. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    15. Bucovetsky, S., 1995. "Rent seeking and tax competition," Journal of Public Economics, Elsevier, vol. 58(3), pages 337-363, November.
    16. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    17. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
    18. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-774, September.
    19. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 205-253, April.
    20. Robert P. Inman, 1988. "Federal Assistance and Local Services in the United States: The Evolution of a New," NBER Chapters,in: Fiscal Federalism: Quantitative Studies, pages 33-78 National Bureau of Economic Research, Inc.
    21. Piketty, Thomas, 1996. "A federal voting mechanism to solve the fiscal-externality problem," European Economic Review, Elsevier, vol. 40(1), pages 3-17, January.
    22. Varian, Hal R, 1994. "A Solution to the Problem of Externalities When Agents Are Well-Informed," American Economic Review, American Economic Association, vol. 84(5), pages 1278-1293, December.
    23. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
    24. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
    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. 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

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

    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:nbr:nberwo:9258. 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: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.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.