A theory of distributional conflict, voluntarism and segregation

Ignatius J. Horstmann*, Tim Besley, Craig Brett, Stephen Coate, Richard Cornes, Jim Davies, Jim Hines, Carlo Perroni, Al Slivinski, Ron Wintrobe, Kimberley Scharf

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


Along with the rise in income inequality in the US, there is evidence of a simultaneous move towards fiscal devolution and increased government reliance on private provision of public goods. This article argues that these phenomena are related. We describe a model of jurisdiction and policy formation in which the structure of government provision is endogenous and public good provision levels are determined by a political process that can exploit private motives for voluntary giving. The model predicts that an increase in income inequality leads to decentralisation, with local jurisdictions becoming more income-homogeneous than the population as a whole. This reduction in local income heterogeneity, combined with a reduced tax base, results in increased reliance by government on private provision.

Original languageEnglish
Pages (from-to)427-453
Number of pages27
JournalEconomic Journal
Issue number527
Publication statusPublished - Mar 2008

ASJC Scopus subject areas

  • Economics and Econometrics


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