Redistribution and regional development under tax competition

This paper considers how capital tax competition affects transfer and development policies in the presence of regional income disparity. In each country, development policies determine the number of rich (poor) regions that (do not) engage in production activities, while transfer policies redistribute income between rich and poor regions. The mix of transfer and development policies is inefficient under tax competition: conditional on the equilibrium tax rate, too much revenue is spent on development policies and too little on transfer policies. This analysis of the expenditure mix implies that development policies are used as a means of regional redistribution even if transfer policies are efficient instruments for this purpose. Moreover, it is shown that the overall level of public expenditure may be too high because of the possibility of over-development.     

Variable population size issues in models of decentralized income redistribution

We examine the distributive implications of decentralized redistribution in a federation with mobility. From a regional perspective, redistribution involves variable populations. As distribution and population issues are normatively inseparable, regional social preferences should exhibit reasonable properties in both respects. Critical-level (CL) utilitarianism does so. In autarky, CL utilitarian governments implement an egalitarian solution. With free mobility some degree of inequality always proves optimal when critical levels are fixed. Egalitarianism can be reached as a Nash equilibrium if and only if average incomes are used as variable critical levels. Since this is unacceptable on efficiency grounds we conclude that under reasonable assumptions egalitarian outcomes do not survive in fiscal games.     

Business cycles and redistribution: The role of government quality

We study how government quality mediates the relationship between business cycles and redistribution. Our key hypothesis is that the potential of income redistribution to reduce rising inequality levels after an economic crisis depends on government quality. The empirical evidence based on a panel of 46 countries over the period 1996–2016 lends strong support to this hypothesis. We find that macroeconomic recessions promote redistribution of income in high government quality contexts, but they lead to wider economic inequalities in countries with poor quality of government.     

Charity and redistributive taxation in a unionized economy

European economies are characterized by unionized labor markets and governmental redistribution of income. This paper studies a model where those two features are combined with the possibility for individuals to make charitable contributions to the poor. The model exhibits equilibrium unemployment that increases with the degree of altruism. It is shown that a more progressive income tax can both reduce the unemployment rate and improve the public budget. These results are driven by charity increasing wage pressure and the altruistic rich failing to internalize the effect of their donations on the wage setting behavior of the unions.     

Central-city income redistribution and the flight to the suburbs: A stylized model

This paper characterizes the optimal tax policy of a central-city government whose goal is to redistribute income from the rich to the poor to maximize the intertemporal utility of the latter group. Since redistribution erodes the tax base by stimulating suburban flight on the part of the rich, choosing the optimal path for the income tax rate is a problem in optimal control. The nature of the solution to the problem is shown to depend crucially on the level of the discount rate and the time path of exogenous income for the poor.     

Inequality and catching-up under decreasing marginal impatience

This paper examines how endogenous time preference interacts with inequalities in economic development. We consider two distinct groups of households with intrinsic inequality (e.g., capitalists and workers), and show that (i) under decreasing marginal impatience (DMI), an unequal society may be preferable for poor households than an egalitarian one in which every household owns an equal share of asset; (ii) poor households tend to benefit more under DMI than CMI (constant marginal impatience) from positive shocks; (iii) inequality exhibits a sharp inverted-U shape as more people become rich, which should be good news for developing countries in catching up; and (iv) a tax on capital income reduces poor households’ income when the fraction of the rich is sufficiently small. We also examine immigration and discuss capital mobility.     

我国城镇居民初次分配和再分配收入差距的来源及贡献比较

本文测算了改革开放以来我国城镇居民收入差距,并利用收入来源分解基尼系数法对初次分配和再分配收入差距的来源及其对城镇居民收入差距的贡献进行了比较。研究表明,持续扩大的初次分配收入差距是城镇居民收入差距的主要因素,再分配收入对城镇居民收入差距逆向调节。城镇居民收入分配机制还有较大改革空间。本文对此作了实证分析并给出了政策建议。     

A supply-demand model of public sector size

We develop a supply-demand model for the public sector with a political equilibrium. The model considers the inefficiencies caused by taxes and includes costs associated with the provision of public goods to consumers. We show that the size of the public sector may depend on the median voter's income, population size, costs associated with paying tax, and quality of institutions, all of which reflect the costs of provisioning public goods. The estimates for the Organisation for Economic Co-operation and Development member countries are compatible with theoretical predictions; however, they do not confirm Wagner's law, which holds that the public sector share does not grow with an increase in income. A greater dependency ratio and the Gini coefficient increase demand for redistribution policies. Greater government effectiveness is a supply-side factor that increases the public sector's share in an economy.     

Who's in charge of the central city? The conflict between efficiency and equity in the design of a metropolitan area

A circular metropolitan area consists of a central city surrounded by a suburb. Households sort over the two jurisdictions based on public service levels and their costs of commuting to the metropolitan center. Using numerical simulations, we show that (1) there typically exist two equilibria: one in which the poor form the voting majority in the central city and the other in which the rich form the majority in the central city; (2) there is an efficiency vs. equity trade-off as to which equilibrium is preferred; and (3) if the central city contains only poor households, equity favors expanding the central city to include rich households. The third result arises not because of a fiscal subsidy from rich to poor households induced by a property tax but rather because of a change in house price capitalization.     

Corruption control,shadow economy and income inequality: Evidence from Asia

Developing countries often suffer from high corruption, high income inequality and poor institutional arrangements that give rise to large shadow economies. Earlier evidence shows that shadow economies moderate the negative effects of corruption on income inequality in highly unequal South American countries. For Asia, we show that the persistence of shadow economies raises inequality even if corruption control is strong. Supported by static and dynamic panel data analyses of 21 countries in Asia between 1995 and 2015, we show that in order to combat rising inequality, corruption control must be complemented by the ability to translate secondary and tertiary school enrolment into industrial and, more importantly, service sector jobs. Countries with low corruption but high inequality can reduce inequality by committing to higher public consumption expenditures. Further, combining greater trade openness with low corruption lowers inequality, except for countries in South Asia.     

Linkages between income inequality,international remittances and economic growth in Pakistan

This paper explores the dynamic linkages between income inequality, international remittances and economic growth using time series data over the period of 1976–2006 in case of Pakistan. The cointegration analysis based on the bounds test confirms the existence of a long-run relationship between income inequality, international remittances and economic growth. Our results reveal that income inequality and international remittances enhance economic growth. The causality analysis based on innovative accounting approach shows bidirectional causal relationship between income inequality and economic growth and same is true for international remittances and income inequality. International remittances are cause of economic growth but not vice versa. Although we find support for Kuznets hypothesis but Pakistan is yet to benefit, in terms of reducing the gaps of income inequality, from the international flow of remittances and economic growth. The paper argues that, from a policy perspective, there is an urgent need for policy makers in Pakistan to reduce the widening gap of income inequality by focusing on income redistribution policies and to go beyond the traditional factors in balancing income inequality.     

EQUALITY OF OPPORTUNITY: POLICY AND MEASUREMENT PARADIGMS

Abstract Equality of opportunity is a widely accepted principle of distributive justice and it is the leading idea of most political platforms in several countries. According to this principle, a society might institute policies that secure an equal distribution of the means to reach a valuable outcome among its members. Once the set of opportunities have been equalized, which particular opportunity, the individual chooses from those open to her, is outside the scope of justice. Ex ante inequalities, and only those inequalities, should be eliminated or compensated for by public intervention. The recent literature on the opportunity egalitarianism often merges these questions introducing two different economic issues. On one side the design of a public policy intended to implement the equality of opportunity view and on the other side the problem of measuring the degree of opportunity inequality in a society. We describe the basic setting and assumptions of some different approaches derived by Roemer’s algorithm for public policy and then we discuss some theoretical and empirical studies to separate and test alternative paradigms on the measurement of inequality of opportunity. Accordingly, an extended critique on the causality issue on policies and measurements is taken into account.     

Pursuing justice against the abuse of power by the rich through social media: A case study

ABSTRACT

The purpose of this case study is to compare and contrast two recent legal cases and to derive practical implications to promote social justice in terms of income inequality. This study focuses on exploring and analyzing two of the most recent legal cases of the abuse of power by the rich in order to identify the effects of social media on these types of cases. Despite the availability of many studies and findings about the tolerance level to income inequality, the following logic is more appropriate in applying and analyzing the two cases: If people don’t know, see, or experience the abuse of the rich or income inequality, they are more tolerant of the abuse and income inequality. Based on the analysis of the two cases, the article concludes that these two cases are not the usual air rage cases; they are more about the abuse of the rich and the punishment decided by the use of technology.     

The Distribution and Redistribution of Opportunity

Recent theories of distributive justice focus on individual opportunities as the appropriate standard for distributive judgements. To translate this philosophical view into concrete public policy, three branches of economic literature have arisen, which we draw together here and critically assess. These concern ( i ) the measurement of individuals' opportunity sets, ( ii ) the measurement of the degree of inequality present in a distribution of opportunities, and ( iii ) the design of redistribution mechanisms intended to increase the degree of 'opportunity equality'. The purpose of the exposition is to unify the three themes, to give a flavour in non‐technical terms of what is going on in these very active literatures, and to indicate areas which remain open for research.     

Cash transfers versus jobs programs

This paper uses a microsimulation computer model to compare the work incentive and distributional implications of public service employment programs and direct transfer programs. The simulation findings suggest that a pure direct transfer program would diminish poverty and inequality by somewhat more than an equal cost plan than combined direct transfers with a jobs program. Moreover, the results imply that a redistribution scheme based entirely on direct transfers is at least as effective per dollar of tax expenditure in raising incomes as a combination of direct transfers and jobs. Furthermore, the simulated job and direct transfer combinations were predicted to cause reductions in private sector earnings that are at least as large as those that would result from comparable schemes that relied solely upon direct transfers.     

Subsidies as sorting devices

The divergence between tax payments and the cost of providing public services that arise from financing local public services provides an incentive for higher-income communities to deter the entry of lower-income households into their community. Here we demonstrate that higher-income households, to insure that low-income households do not enter their community or reduce the number that do enter, subsidize goods consumed by higher-income households more than by lower-income households. This strategy will make the rich community less attractive to the poor, deterring their entry to the community.     

Participation and study decisions in a public system of higher education

We analyze the decision whether to participate and where and what to study in a public system of higher education, based on a unique dataset of all eligible high school pupils in an essentially closed region (Flanders). We find that pupils perceive the available institutions and programs as close substitutes relative to the outside option. This implies an ambiguous role for travel costs: they hardly affect the participation decision, but have a strong impact on the decision where and what to study. To illustrate how our empirical results can inform the debate on reforming public systems, we assess the effects of tuition fee increases. Uniform cost‐based tuition fee increases achieve most of the welfare gains; the additional gains from fee differentiation are relatively limited. These welfare gains are quite large under conservative assumptions on the social cost of public funds, and there is a substantial redistribution from students to outsiders. Copyright © 2009 John Wiley & Sons, Ltd.     

CONVERGENCE AND ECONOMIC PERFORMANCE IN GREECE: EVIDENCE AT REGIONAL AND PREFECTURE LEVEL

The purpose of this paper is to test regional convergence and to investigate interregional disparities in terms of per capita income in Greece. The novelty of our study lies in the use of a disaggregated dataset for an extended time period (1971–2003) at two regional levels (NUTS II & NUTS III). Our results indicate that there is β convergence between prefectures but not among regions, while no evidence of σ convergence is found at both regional levels. Also, the GDP geographic concentration and population density have a negative impact on growth, which outweighs the positive growth effect of population geographic concentration and GDP spatial inequality. Thus, policies aiming at the decentralization of economic activity in Greece might enhance growth and regional equality simultaneously. Finally, we do not find economic dualism across geographic areas; however, rich prefectures seem to converge faster than poor ones.     

我国现阶段贫富差距的经济学分析

改革开放以来,在经济增长的同时我国的贫富分化现象也日益严峻,体现在基尼系数的变化、城乡收入差距的扩大、行业差异、地区差距、居民家庭财产集中度等一系列领域。传统城乡二元经济结构的存在、不合理的社会保障模式、经济领域的不平等竞争是导致贫富差距扩大的主要原因。政府必须利用各种经济、法律手段调节收入分配,缔造公平的竞争环境,同时加强以社会保障为主体的制度建设。     

Characterizing neutrality in the voluntary contribution mechanism

When public goods are provided by voluntary contributions, redistribution of initial holdings among an unchanged set of contributors will not alter the Nash equilibrium allocation.Constraint invariance, where a participant faces the same class of constraints even after her endowment is changed, impliesglobal neutrality under a generalized Nash equilibrium concept. Geometrically,path invariance, where the best response path does not move even after the endowment change, is equivalent to global neutrality assuming a sufficiently rich class of economies. We thank Shinji Ohseto, Hiroaki Osana and Stephen Turnbull for their comments. We are also grateful to an anonymous referee and an associate editor for their comments and suggestion. Research was partially supported by the Nomura Foundation for the Social Sciences and the Grant in Aid for General Research 03803008 of the Ministry of Education, Science and Culture of Japan.