A theory of distributional conflict, voluntarism and segregation

Research output: Contribution to journalArticlepeer-review

Authors

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

Colleges, School and Institutes

External organisations

  • University of Toronto
  • THE UNIVERSITY OF WARWICK
  • University of Alabama
  • Stanford University, Stanford, California 94305, USA
  • University of Western Ontario

Abstract

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.

Details

Original languageEnglish
Pages (from-to)427-453
Number of pages27
JournalEconomic Journal
Volume118
Issue number527
Publication statusPublished - Mar 2008

ASJC Scopus subject areas