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 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 and 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. Furthermore, the set of subsidy recipients does not depend on households' preferences, but depends only on income heterogeneity.
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
Date: 2018-06-01, Revised 2019-06-01
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