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A model of redistribution under social identification in heterogeneous federations

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  • Holm, Joshua

Abstract

Redistribution of resources to accommodate income heterogeneity within a federation is often fiercely debated (e.g., Belgium, Germany or the European Union). To help elucidate potential drivers behind such debates, this article builds on social identity theory to develop a theoretical framework linking jurisdictional identification and preferences towards intra-federation redistributive financial flows. We show that federal, rather than local, identification can lead individuals to shift their redistribution preferences against their narrowly-defined personal economic interest. In contrast to predictions of standard models, the sign and strength of this effect depends crucially not only upon individuals' characteristics, but also upon the social groups (i.e. regions) to which they belong. We furthermore illustrate that federal, rather than regional, identification should be more widespread in poorer and/or more populous regions within a federation, but less common in regions which are very homogeneous internally or very dissimilar from the rest of the federation.

Suggested Citation

  • Holm, Joshua, 2016. "A model of redistribution under social identification in heterogeneous federations," Journal of Public Economics, Elsevier, vol. 143(C), pages 39-48.
  • Handle: RePEc:eee:pubeco:v:143:y:2016:i:c:p:39-48
    DOI: 10.1016/j.jpubeco.2016.08.005
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    Cited by:

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    2. Mariko Nakagawa & Yasuhiro Sato & Kazuhiro Yamamoto, 2019. "Segregation and Public Spending under Social Identification," CIRJE F-Series CIRJE-F-1132, CIRJE, Faculty of Economics, University of Tokyo.
    3. Stergios Skaperdas & Patrick A. Testa, 2023. "National Identity, Public Goods, and Modern Economic Development," CESifo Working Paper Series 10358, CESifo.
    4. Paetzel, Fabian & Sausgruber, Rupert, 2018. "Cognitive ability and in-group bias: An experimental study," Journal of Public Economics, Elsevier, vol. 167(C), pages 280-292.
    5. Philipp Harms & Jana Niedringhaus, 2024. "On Social Cohesion and Social Disintegration," Working Papers 2401, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    6. Sanjit Dhami & Emma Manifold & Ali al‐Nowaihi, 2021. "Identity and Redistribution: Theory and Evidence," Economica, London School of Economics and Political Science, vol. 88(350), pages 499-531, April.
    7. Schüssler, Julian & Hinz, Thomas & Leuffen, Dirk & Selb, Peter, 2024. "Income, Identity, and International Redistribution: Evidence from the European Union," Working Papers 20, University of Konstanz, Cluster of Excellence "The Politics of Inequality. Perceptions, Participation and Policies".
    8. Yuki, Kazuhiro, 2023. "Social Identity, Redistribution, and Development," MPRA Paper 115965, University Library of Munich, Germany.
    9. Benny Geys & Kai A. Konrad, 2016. "Patriotism and Taxation," Working Papers tax-mpg-rps-2016-11, Max Planck Institute for Tax Law and Public Finance.
    10. Abramson, Boaz & Shayo, Moses, 2022. "International integration and social identity," Journal of International Economics, Elsevier, vol. 137(C).
    11. Dolls, Mathias & Wehrhöfer, Nils, 2021. "Attitudes towards euro area reforms: Evidence from a randomized survey experiment," European Journal of Political Economy, Elsevier, vol. 67(C).
    12. Yotam Margalit, 2019. "Economic Insecurity and the Causes of Populism, Reconsidered," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 152-170, Fall.
    13. Jack Mintz, 2019. "Two Different Conflicts in Federal Systems: An Application to Canada," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(14), April.

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    More about this item

    Keywords

    Identity; Redistribution; Fiscal federalism;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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