Interregional inequality and Robin Hood politics

Arbeitspapier

This paper studies the implications of interregional redistributive taxation on interregional and interpersonal inequality and on social welfare. We introduce a model of two regions, where individuals are differentiated by their ability and opportunity, the former being determined by heritage and the latter by their residence. Moreover, agents are immobile and respond to interregional transfers by adjusting their labour supply, rather than by re-locating. The analysis shows, firstly, that increases in the rate of interregional redistribution need not generate neither reduced interregional inequality nor higher social welfare, and secondly, that their effects are highly dependent on the initial state of the economy. In particular, interregional redistribution seems most likely to be beneficial in terms of interregional and interpersonal equity as well as social welfare in low-tax economies, where the degree of income dispersion is high between, but not within regions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 523

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
• Subject: interregional redistribution ; welfare ; inequality ; Regionale Einkommensverteilung ; Einkommensumverteilung ; Sozialhilfe ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bergman, Malin L.
• Event: Veröffentlichung
• (who): Stockholm School of Economics, The Economic Research Institute (EFI)
• (where): Stockholm
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/56183
• Last update: 10.03.2025, 11:43 AM CET