The new federalism: Distributional conflict, voluntarism, and segregation

Arbeitspapier

Along with the rise in income inequality in the U.S., we have observed a simultaneous move toward fiscal devolution and increased government reliance on private provision of public goods. This paper 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 decentralization, 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Research Report ; No. 2000-11

Classification and Topics

• Classification: Wirtschaft
• Subject: fiscal federalism ; private provision of public goods ; jurisdiction formation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Horstmann, Ignatius J. ; Scharf, Kimberley A.
• Event: Veröffentlichung
• (who): The University of Western Ontario, Department of Economics
• (where): London (Ontario)
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/70373
• Last update: 10.03.2025, 11:42 AM CET