Income Stratifcation in Multi-Community Models
This paper presents necessary conditions for stratification of the population in multi-community models with housing markets and heterogeneous households. The conditions for the sorting of the population according to income classes or other dimensions of heterogeneity are established without explicitly describing the household utility function and budget constraint. They therefore apply to a broad class of models, including models with income taxation and property taxation. The stratification conditions in the existing literature are surveyed using a common framework and a series of new and less specific models are proposed. The analysis suggests that in models with income taxation, stratification can often only be established under very specific assumptions on the household's preferences. Furthermore, stratification cannot be ensured with progressive or regressive tax schemes.
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- Dennis Epple & Holger Sieg, 1998.
"Estimating Equilibrium Models of Local Jurisdictions,"
NBER Working Papers
6822, National Bureau of Economic Research, Inc.
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- Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
- Epple, Dennis & Filimon, Radu & Romer, Thomas, 1993. "Existence of voting and housing equilibrium in a system of communities with property taxes," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 585-610, November.
- Dennis Epple & Thomas Romer & Holger Sieg, 2001. "Interjurisdictional Sorting and Majority Rule: An Empirical Analysis," Econometrica, Econometric Society, vol. 69(6), pages 1437-1465, November.
- Kurt Schmidheiny, 2002. "Equilibrium and Stratification with Local Income Taxation when Households Differ in both Preferences and Incomes," Diskussionsschriften dp0216, Universitaet Bern, Departement Volkswirtschaft.
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