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Redistribution as a Local Public Good Subject to Congestion

01 Jan 2008-Economia Mexicana-nueva Epoca (Centro de Investigación y Docencia Económicas)-Vol. 17, Iss: 1, pp 49-62

AbstractWhen analyzing migration policies, second best redistribution be- comes a local public good subject to congestion. The remedial policy consists of a kind of second best finance for that good.

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Journal ArticleDOI
Abstract: We study attitude toward redistribution by local policy-makers in the context of public childcare in Italy. Within a substantially homogeneous legislative framework, different municipalities autonomously define how participation fees vary with a compound indicator of income and wealth (ISEE), thus redistributing resources across households using the service. The nearly one hundred municipalities we take into account exhibit wide heterogeneity in redistributive attitudes. We find statistically significant correlations with a number of individual characteristics of policy-makers and municipalities, but not with those of the ex ante distribution of income, which should be central according to both normative and positive theory. Since the price of public childcare is subsidized, resources are also redistributed from taxpayers to users. The evidence we find is consistent with the hypothesis that this type of redistribution is a public good.

4 citations


Cites background or result from "Redistribution as a Local Public Go..."

  • ...We find that redistribution tends to be less in small cities, which is in contrast with the idea that proximity might be positively correlated with the willingness to redistribute and some empirical evidence on this (Ashworth et al., 2002)....

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  • ..., Chernick (2005) finds that party control by Republicans is correlated with less progressivity, whereas there tends to be an offsetting effect towards pre-tax income inequality, meaning that policies are more progressive where inequality is greater....

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  • ...The empirical work by Ashworth et al. (2002) has a more specific focus on redistribution as a local public good (Pauly, 1973) and the related experimental literature on the role of the level of knowledge of beneficiaries (Orbell et al., 1988), communication (Ledyard, 1997), and identification (Bohnet and Frey, 1999) in determining individual willingness to transfer resources to other people. The idea is that more redistribution might be expected where distances, broadly speaking, are shorter. Ashworth et al. (2002) find evidence that individual willingness to redistribute is negatively correlated with the geographical size of the municipality, affecting both the number of recipients and the size of the benefit....

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  • ...The empirical work by Ashworth et al. (2002) has a more specific focus on redistribution as a local public good (Pauly, 1973) and the related experimental literature on the role of the level of knowledge of beneficiaries (Orbell et al....

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  • ...We find that redistribution tends to be less in small cities, which is in contrast with the idea that proximity might be positively correlated with the willingness to redistribute and some empirical evidence on this (Ashworth et al., 2002). On the other hand, our extension of the analysis to the redistribution from tax-payers to users seems to confirm some interesting predictions of the model proposed by Orr (1976). In particular, we find that the two variables that are specific to the public good nature of redistribution - the proportion of people receiving the benefit within the population and the absolute number of recipients - are statistically significant with the expected sign....

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01 Jan 2013
Abstract: We study attitude toward redistribution by local policy-makers in the context of public childcare in Italy. Within a substantially homogeneous legislative framework, different municipalities autonomously define how participation fees vary with a compound indicator of income and wealth (ISEE), thus redistributing resources across households using the service. The nearly one hundred municipalities we take into account exhibit wide heterogeneity in redistributive attitudes. We find statistically significant correlations with a number of individual characteristics of policy-makers and municipalities, but not with those of the ex ante distribution of income, which should be central according to both normative and positive theory. Since the price of public childcare is subsidized, resources are also redistributed from taxpayers to users. The evidence we find is consistent with the hypothesis that this type of redistribution is a public good.

1 citations


References
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Journal ArticleDOI
TL;DR: Simple general equilibrium analysis shows that migration can lead to Pareto-inferior outcomes in the destination region if immigrants are the beneficiaries of redistributive transfers.
Abstract: This paper analyses redistribution policies that transfer income between owners of immobile factors of production and workers in a given region. The menu of income distribution possibilities attainable through tax/transfer policy in the presence of labour mobility is characterized. Simple general equilibrium analysis shows that migration can lead to Pareto-inferior outcomes in the destination region if immigrants are the beneficiaries of redistributive transfers. All residents of the destination region may gain however if transfer payments are also paid to workers in the source region so as to reduce the level of immigration. (SUMMARY IN FRE) (EXCERPT)

194 citations


"Redistribution as a Local Public Go..." refers background or methods or result in this paper

  • ...Therefore, these type of taxes could be the appropriate remedy for the problems analyzed in Brecher and Choudhri (1990) and Wildasin (1994)....

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  • ...This coincides with the results obtained in Wildasin (1994) (in fact, this is a particular case of Wildasin's model) and with the results of Brecher and Choudhri (1990) for a small country....

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  • ...1, primer semestre de 2008 49 In a more theoretical framework, Wildasin (1994) shows how income redistribution policies by a host country distort migration decisions, and may make all inhabitants of the host country worse off when freeing migration....

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  • ...Given that we focus our discussion on the problems in using the DixitNonnan compensatory mechauíism, we present a simple model (based on Wildasin, 1994) in which, as trivial efficiency gains from freeing migration will appear, the only issue is the redistribution of the efficiency gains from…...

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  • ...The basic intuition of the negative results in Brecher and Choudhri (1990) and Wildasin (1994) is that subsidies can attract more migrants than is eñicient....

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Journal ArticleDOI
Abstract: This paper examines the possibility of designing a free-trade equilibrium that is Pareto superior to a given autarkic one, using redistributive tools other than lump-sum transfers. It is shown that (i) if the production frontier allows some non-zero transformation in the neighbourhood of autarky, and (ii) there is a commodity, pure or composite, for which no two consumers trade on opposite sides of the market, then taxes and subsidies on goods and factors suffice for the purpose. If uniform poll subsidies are available, then condition (ii) is not needed. Such policies are compatible with incentive-compatibility constraints, while lump-sum transfers are not.

166 citations


Journal ArticleDOI
Abstract: This article examines the impact of the 1996 welfare reform legislation on welfare use in immigrant households. Although the data indicate that the welfare participation rate of immigrants declined relative to that of natives at the national level, this national trend is entirely attributable to the trends in welfare participation in California. Immigrants living in California experienced a precipitous drop in their welfare participation rate (relative to natives). Immigrants living outside California experienced roughly the same decline in participation rates as natives. The potential impact of welfare reform on immigrants residing outside California was neutralized because many state governments responded to the federal legislation by offering state-funded programs to their immigrant populations and because the immigrants themselves responded by becoming naturalized citizens. The very steep decline of immigrant welfare participation in California is harder to understand, but could be a by-product of the changed political and social environment following the enactment of Proposition 187. It's just obvious that you can't have free immigration and a welfare state. Milton Friedman.

110 citations


"Redistribution as a Local Public Go..." refers background in this paper

  • ...As surveyed in Borjas (2002), important US policy measures regarding immigration have been inspired by the concems that migrants can hecome public charges, as well as to avoid the US pubUc welfare to become an immigration magnet (consider, for instance, the 1891 US Congress legislation conceming entry of persons likely to become public charges, or even the 1994 Proposition 187 in Cahfomia)....

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  • ...Introduction As surveyed in Borjas (2002), important US policy measures regarding immigration have been inspired by the concems that migrants can hecome public charges, as well as to avoid the US pubUc welfare to become an immigration magnet (consider, for instance, the 1891 US Congress legislation…...

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Journal ArticleDOI
TL;DR: Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers.
Abstract: "According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers."

89 citations


Book ChapterDOI
Abstract: Like any trade activity, migration tends to generate gains to all parties involved, (the migrants as well as the native-born population. However, with a mal-functioning labor market, migration will exacerbate the imperfections in the market. Consequently, it may lead to losses to the native-born population which typically are quite sizable. Another economic problem raised by migration is the additional toll imposed on the welfare-state income-distribution institutions. Being unable to exclude migrants from the various entitlement programs and public services, the modern welfare state can find migration rather costly. These two economic considerations may help explain the resistance to migration despite the pure gains-from-trade benefits created by it.. Immigration could be more beneficial to the native-born population when the labor markets are better-functioning and the welfare programs are less comprehensive.

85 citations


"Redistribution as a Local Public Go..." refers background in this paper

  • ...(See Myers and Papageorgiou, 2000; Razin and Sadka, 1995; WeUisch and Wildasin, 1996; Welhsch andWalz 1998; and also Wildasin, 1998; for related topics.)...

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