Decentralized redistribution in a laboratory federation
Ana Ania () and
Journal of Urban Economics, 2016, vol. 93, issue C, 49-59
The idea of laboratory federalism provides a strong argument in favor of fiscal decentralization. It views autonomous jurisdictions in a federation as laboratories where new policies can be tested at low risk for the entire system. If successful, these policies will spread out by imitation; otherwise, they will be discarded. Studying this idea in a dynamic setting of fiscal competition, we show that, due to externalities between jurisdictions, policies that appear successful and are therefore mimicked do not necessarily enhance welfare, and vice versa. Specifically, in the classical framework of decentralized, rich-to-poor income redistribution with labor mobility the long-run outcome entails a complete breakdown of redistribution with zero subsidies to the poor everywhere.
Keywords: Laboratory federalism; Mobility; Redistribution; Asymmetric ESS (search for similar items in EconPapers)
JEL-codes: C73 H75 H77 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Decentrqalized Redistribution in a Laboratory Federation (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:93:y:2016:i:c:p:49-59
Access Statistics for this article
Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange
More articles in Journal of Urban Economics from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().