Majority Voting in a Model of Means Testing
Buly Cardak (),
Gerhard Glomm () and
No 2018-14, Working Papers from Federal Reserve Bank of St. Louis
We study a model of endogenous means testing where households differ in their income and where the in-kind transfer received by each household declines linearly with income. Majority voting determines the two dimensions of public policy: the size of the welfare program and the means-testing rate. We establish the existence of a sequential majority voting equilibrium, when the households vote first on the size of the program and then on the means-testing rate. We show that the means-testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size.
Keywords: Sequential majority voting; Means testing; Political support; Targeting (search for similar items in EconPapers)
JEL-codes: D70 D72 H20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pol
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