The segregative properties of endogenous jurisdictions formation with a welfarist central government.

This paper examines the segregative properties of endogenous processes of jurisdiction formation à la Tiebout in the presence of a central government who makes equalization transfers to jurisdictions in such a way as to maximize a welfarist objective. Choice of location by households, of local public good provision by jurisdictions, and of equalization grants and tax by the central government are assumed to be made simultaneously, taking the choices of others as given. Two welfarist objectives for the central government are considered in turn: Leximin and Utilitarianism. If the central government pursues a Leximin objective, it is easily shown that the only stable jurisdiction structures that can emerge are those in which the jurisdictions' poorest households have all the same wealth. A richer class of stable jurisdiction structures are compatible with a central utilitarian government. Yet, it so happens that, if individual preferences are additively separable, the class of households preferences that garantee the segregation of any stable jurisdiction structure remains unchanged by the presence of a central government.

The Effect of Spillovers and Congestion on the Segregative Properties of Endogenous Jurisdiction Structure Formation

This paper analyzes the effect of spillovers and congestion of local public goods on the segregative properties of endogenous formation of jurisdiction. Households living in the same place form a jurisdiction and produce a local public good, that creates positive spillovers in other jurisdictions and suffers from congestion. In every jurisdiction, the production of the local public good is financed through a local tax on household's wealth. Local wealth tax rates are democratically determined in all jurisdictions. Households also consume housing in their jurisdiction. Any household is free to leave its jurisdiction for another one that would increase its utility. A necessary and sufficient condition to have every stable jurisdiction structure segregated by wealth, for a large class of congestion measure and any spillovers coefficient structure, is identified: the public good must be a gross substitute or a gross complement to the private good and the housing.Jurisdictions, Segregation, Spillovers, Congestion

The effect of spillovers and congestion on the segregative properties of endogenous jurisdictions formation*

This paper analyzes the eect of spillovers and congestion of local public services on the segregative properties of endogenous formation of jurisdictions. Households choosing to live at the same place form a jurisdiction whose aim is to produce congested local public services, that can create positive spillovers to other jurisdictions. In every jurisdiction, the production of the local public services is nanced through a local tax based on households' wealth. Local wealth tax rates are democratically determined in all jurisdictions. Households also consume housing in their jurisdiction. Any household is free to leave its jurisdiction for another one that would increase its utility. A necessary and sucient condition to have every stable jurisdictions structure segregated by wealth, for a large class of congestion measures and any spillovers coecients structure, is identied: the public services must be either a gross substitute or a gross complement to the private good and the housing.Jurisdictions; Segregation; Spillovers; Congestion JEL Classication: C78; D02; H73; R13

The segregative properties of endogenous jurisdiction formation with a land market

This paper examines the segregative properties of Tiebout-like endogenous processes of jurisdiction formation in presence of a competitive land market. In the model considered, a continuum of households with different wealth levels and the same preferences for local public goods, private spending and housing choose a location from a finite set. Each location has an initial endowment of housing that is priced competively and that belongs to absentee landlords. Each jurisdiction is also endowed with a specific technology for producing public goods. Households' preferences are assumed to be homothetically separable between local public goods on the one hand and private spending and housing on the other. Public goods provision is financed by a given, but unspecified, mixture of (linear) wealth and housing taxes. We show that stable jurisdiction structures are always segregated by wealth only if households view any public good conditionally on the quantities of the other public goods as either always a gross substitute, or either always a gross complement, to private spending. We also show that, if there are more than one public good, this condition is not sufficient for segregation unless households preferences are additively separable. Since this condition is necessary and sufficient for the segregation of stable jurisdiction structures without land market and with only one public good, our results suggests that introducing a land market does not affect the segregative properties of endogenous jurisdiction formation but that increasing the number of public goods mitigates segregation.Land market; segregation; jurisdictions; local taxes; mobility.

How does labor supply react to different tax rates? A field inquiry

Participants (96 students) were divided into three groups. Subjects in Group 1 were asked their labor supply, being their income burdened by a 25% tax rate. Then they were asked their labor supply if the tax rate were 40%. Subjects in G2 were asked their labor supply with a 25% tax rate, and subjects in G3 with a 40% tax rate. We first compared labor supplies within G1; then we compared labor supplies between G2 and G3. Finally we compared the two comparisons. In G1, subjects' labor supply is different, negatively related with the tax rate: this is probably due to how the questions are put, which suggest different answers. In fact, comparing G2 and G3, the labor supply is almost the same. Students who are part-time workers and students who are not supply different amounts of labor. There is no difference at all when comparing G2 and G3 as for non-working students, being the whole difference between G2 and G3 due to working students, who probably compare the tax rate they pay on their real income to the ones suggested in the questionnaire. Singling out non-biased responders, i.e. non-working students in G2 and G3, the tax rate on income, if given, independently of its level, does not influence the labor supply.labour supply, taxation, individual behaviour

Sharing the pie: the Lutheran is neither opportunistic nor generous

This paper studies how individual religiosity affects people's behaviour. In particular here I study the behaviour of the second players in a standard trust game. They have the possibility of sharing some resources between themselves and their game mates. It results that more religious people tend to choose an even allocation of these resources, whilst the less religious participants are either opportunistic or generous.religiosity, distribution of resources, inequity aversion

Migrants and mafia as global public goods

Global public goods, differently from what it might be thought, are quite common in the real world. This work suggests that both the governments' struggle against Mafia and the prevention of immigration can be regarded as global public goods. We assume a federation of jurisdictions with two tiers of Government: the central and the local. Regional utility directly represents the preferences of citizens, since the local governments aim at individualistic utility maximization; central government uses the redistribution of resources among the members of the federation to maximize the social welfare which is given, as usual, by the sum of regional utilities. The Central Government aims at welfare maximization. To get its goal it has to find out the efficient way to fund and provide public goods taking into account not only their particular characteristics but also the fact that, in many circumstances, their production faces increasing cost, which may depend both on the quantity of good produced and on the type (high or low cost) of the producer (which, in this framework, coincides with the jurisdiction). Thus the first issue addressed by the paper concerns the choice between central and local provision. Furthermore, as far as the informational structure is concerned, the centre lacks information concerning the type of each region. Thus, the central government's key informational problem concerns the regional costs and quantities with regard both to the public and the private good. Indeed we assume that the centre can observe the expenditure levels but neither the costs nor the outputs associated with those expenditure levels.global public good, asymmetric information, adverse selection, redistribution, Mafia

Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market

This paper describes, through a theoretical approach, the interactions between institutional lenders and local moneylenders, and how these affect the rural credit market. It evaluates the effects produced by the introduction of "spillovers" in a rural credit market with rationing in which banks and moneylenders interact simultaneously while working in distinct segments. Due to the strong and consolidated social ties, it is probable that the spread of knowledge concerning potential debtors comes about in targeted and rapid way with reduced costs for the lenders as well.

Sample selection correction in panel data models when selectivity is due to two sources

This paper proposes a specification of Wooldridge's (1995) two step estimation method in which selectivity bias is due to two sources rather than one. The main objective of the paper is to show how the method can be applied in practice. The application concerns an important problem in health economics: the presence of adverse selection in the private health insurance markets on which there exists a large literature. The data for the empirical application is drawn from the 2003/2004 Medical Expenditure Panel Survey in conjunction with the 2002 National Health Interview Survey.

Persistence of civil wars

A notable feature of post-World War II civil wars is their very long average duration. We provide a theory of the persistence of civil wars. The civilian government can successfully defeat rebellious factions only by creating a relatively strong army. In weakly-institutionalized polities this opens the way for excessive influence or coups by the military. Civilian governments whose rents are largely unaffected by civil wars then choose small and weak armies that are incapableof ending insurrections. Our framework also shows that when civilian governments need totake more decisive action against rebels, they may be forced to build over-sized armies, beyond the size necessary for fighting the insurrection, as a commitment to not reforming the military in the future.civil wars, commitment, coups, military, political transitions, political economy.