Suchergebnisse

There are many well-developed theories that explain why governments redistribute income, but very few can explain why this often is done in a socially inefficient form. In the theory we develop, compared to efficient methods, inefficient redistribution makes it more attractive to stay in or enter a group that receives subsidies. When political institutions cannot credibly commit to future policy, and when the political influence of a group depends on its size, inefficient redistribution is a tool to sustain political power. Our model may account for the choice of inefficient redistributive policies in agriculture, trade, and the labor market. It also implies that when factors of production are less specific to a sector, inefficient redistribution may be more prevalent.

There are many well-developed theories that explain why governments redistribute income, but very few can explain why this often is done in a socially inefficient form. In the theory we develop, compared to efficient methods, inefficient redistribution makes it more attractive to stay in or enter a group that receives subsidies. When political institutions cannot credibly commit to future policy, & when the political influence of a group depends on its size, inefficient redistribution is a tool to sustain political power. Our model may account for the choice of inefficient redistributive policies in agriculture, trade, & the labor market. It also implies that when factors of production are less specific to a sector, inefficient redistribution may be more prevalent. 75 References. Adapted from the source document.

We study a model with majority voting on redistribution in which agents differ in their skills and their preferences for leisure. Redistribution is generous and average labor supply low if the decisive voter has relatively strong preferences for leisure, while redistribution is limited and average labor supply high if the decisive voter has relatively weak preferences for leisure. Given differences in the preference distributions due to cultural differences or positive complementarities in leisure, our model thus provides an explanation for the substantial differences in redistribution and average working hours between the United States and continental Western Europe. [Copyright 2008 Elsevier B.V.]