Income Redistribution with Well-Informed Local Governments

Horst Raff and John Wilson

International Tax and Public Finance, 1997, vol. 4, issue 4, 407-427

Abstract: This paper examines the problem of redistributing incomeacross jurisdictions and to mobile workers within jurisdictionswhen local governments have better information than the centralgovernment about local production conditions. Under the centralgovernment‘s optimal policy, the subsidies or taxes that localgovernments provide to mobile workers normally depend on whetherthese governments are net recipients or net donors of interjurisdictionalincome transfers. Moreover, the public-input decisions of somelocal governments are distorted. The analysis demonstrates thatit may not be desirable to harmonize social policies across jurisdictions,even when the beneficiaries are quite mobile. Copyright Kluwer Academic Publishers 1997

Keywords: Income Redistribution; Labor Migration; Fiscal Federalism; Incomplete Information (search for similar items in EconPapers)
Date: 1997
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DOI: 10.1023/A:1008604813486

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