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Heterogeneous preferences and in-kind redistribution: Theory and evidence

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  • Bellani, Luna
  • Scervini, Francesco

Abstract

This paper examines the impact of social heterogeneity on in-kind redistribution. We contribute to the previous literature in two ways: we consider (i) the provision of several public goods and (ii) agents different not only in income, but also in their preferences over the various goods provided by the public sector. In this setting, both the distribution and size of goods provision depend on the heterogeneity of preferences. Our main result is that preference heterogeneity tends to decrease in-kind redistribution, while income inequality tends to increase it. An empirical investigation based on United States Census Bureau data confirms these theoretical findings.

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  • Bellani, Luna & Scervini, Francesco, 2015. "Heterogeneous preferences and in-kind redistribution: Theory and evidence," European Economic Review, Elsevier, vol. 78(C), pages 196-219.
    • Handle: RePEc:eee:eecrev:v:78:y:2015:i:c:p:196-219
    DOI: 10.1016/j.euroecorev.2015.06.001
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    Cited by:

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    2. Andrew Pickering & Sheraz Rajput, 2018. "Inequality and the composition of taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 1001-1028, August.
    3. Bellani, Luna & Fabella, Vigile Marie & Scervini, Francesco, 2020. "Strategic Compromise, Policy Bundling and Interest Group Power," IZA Discussion Papers 13924, Institute of Labor Economics (IZA).
    4. Bellani, Luna & Scervini, Francesco, 2020. "Heterogeneity in preferences for redistribution and public spending: A cross-country analysis," European Journal of Political Economy, Elsevier, vol. 63(C).
    5. Holm, Joshua, 2016. "A model of redistribution under social identification in heterogeneous federations," Journal of Public Economics, Elsevier, vol. 143(C), pages 39-48.
    6. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo.

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    More about this item

    Keywords

    Heterogeneous preferences; In-kind redistribution; Voting; Social distance; Local public budgets;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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