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Decentrqalized Redistribution in a Laboratory Federation



Fiscal federalism is often hailed as an innovation procedure: successful policy experiments in one jurisdiction will, via imitation, spread through the entire system, leading to overall better policy performance. We show that such hopes set in laboratory federalism may be ill-founded. For a standard framework of decentralized redistribution in a common labor market with mobile transfer recipients imitationwith- experimentation will lead to a complete breakdown of the welfare state: zero transfers.

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  • Ana B. Ania & Andreas Wagener, 2014. "Decentrqalized Redistribution in a Laboratory Federation," Vienna Economics Papers 1402, University of Vienna, Department of Economics.
  • Handle: RePEc:vie:viennp:1402

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    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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