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Economics of Governance

, Volume 7, Issue 2, pp 133–142 | Cite as

Redistribution and the Nature of Altruism: Should Welfare Programs be Centralized or Decentralized?

  • Kjetil Bjorvatn
  • Alexander W. Cappelen
Original Paper

Abstract

Decentralization of income redistribution may lead to policy competition between jurisdictions and therefore underprovision of redistribution. The ability to carry out redistribution programs is therefore an argument in favor of allocating this responsibility to some higher level authority. On the other hand, empirical results show that the taste for redistribution is lower in multi-ethnic jurisdictions than in more homogenous ones. Centralized redistribution may encompass a larger number of ethnic minorities, and thereby negatively affect redistribution programs. The present paper models the trade-off between these two forces and argues that this trade-off will depend on the nature of altruistic preferences.

Keywords

Altruism Redistribution Centralization Decentralization 

JEL Classification Numbers

D64 H11 H53 H73 

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Copyright information

© Springer-Verlag 2006

Authors and Affiliations

  1. 1.Norwegian School of Economics and Business AdministrationBergenNorway

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