Economics at your fingertips  

The Political Economy of Targeting

Philippe De Donder () and Jean Hindriks ()

Public Choice, 1998, vol. 95, issue 1-2, 177-200

Abstract: One of the most widely used methods of targeting is to reduce welfare benefits as income rises. Although the need for such targeting is clear enough, it also entails two important difficulties. Firstly, the prospect for the recipients of losing part of their benefits if they were to earn more can be a deterrent to work harder. Secondly, by reducing the number of recipients, targeting reduces the political support for taxation and redistribution. The purpose of this paper is to study the voting equilibrium of the degree of targeting and the level of taxation in an economy where labor supply is variable. The analysis reveals that targeting may be fatal for redistribution even though it rejects strictly less than the richest half of the population, and that it is not possible for a coalition of the extremes to form and reject the middle income group from the welfare system. Moreover, because targeting affects labor supply, the authors find that Pareto improvements are possible when targeting is either 'too low' or 'too high.' They also find that voting simultaneously over taxation and targeting is favorable to the poor in the sense that they can converge to their most-preferred policy by successively forming a majority coalition with the rich to increase targeting and with the middle to increase taxation. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (33) Track citations by RSS feed

Downloads: (external link) link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Journal Article: The political economy of targeting (1998) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-05-08
Handle: RePEc:kap:pubcho:v:95:y:1998:i:1-2:p:177-200