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on Positive Political Economics |
| By: | Ryo Arawatari (Faculty of Economics, Shinshu University); Tetsuo Ono (Graduate School of Economics, Osaka University) |
| Abstract: | This paper introduces an overlapping-generations model with earnings hetero- geneity and borrowing constraints. The labor income tax and the allocation of tax revenue across social security and forward intergenerational public goods are determined in a bidimensional majoritarian voting game played by successive gen- erations. The political equilibrium is characterized by an ends-against-the-middle equilibrium where low- and high-income individuals form a coalition in favor of a low tax rate and less social security while middle-income individuals favor a high tax rate and greater social security. Government spending then shifts from social security to public goods provision if higher wage inequality is associated with the borrowing constraint and a low interest-rate elasticity of consumption. |
| Keywords: | Borrowing constraint; Social security; Public goods provision; Ends- against-the-middle equilibrium; Wage inequality |
| JEL: | H41 H55 D72 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0938r&r=pol |
| By: | Go Kotera (Graduate School of Economics, Kyoto University) |
| Abstract: | In this paper, a simple model is proposed to endogenize voting behavior that incorporates a sense of duty to vote. We assume that a sense of duty to vote is an increasing function of a person’s human capital and the public faith in politics, and those with a higher sense of duty often vote. Then, we examine the relationship between income redistribution policy and human capital accumulation. From our assumption, the voter turnout is expected to gradually increase as human capital accumulates. However, we show that, in some cases, the positive relationship between voter turnout and human capital accumulation is not necessarily hold. In addition, the effect of growing inequality on the redistribution policy is investigated. |
| Keywords: | Voter turnout, Human capital, Income distribution, Redistribution |
| JEL: | D31 D72 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:716&r=pol |
| By: | Alessandra Casella (Columbia University - Department of Economics); Aniol Llorente-Saguer (California Institute of Technology); Thomas R. Palfrey (California Institute of Technology) |
| Abstract: | We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define ex ante vote-trading equilibrium, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:clu:wpaper:0910-21&r=pol |
| By: | Jon D. Wisman |
| Abstract: | Although healthy societies may require a degree of material inequality, higher levels of inequality have been linked to negative social consequences ranging from poorer health to lessened democracy. However, the greatest contemporary threat of excessive inequality might be its contribution to increased environmental degradation. Indeed, avoiding devastation of our habitat may be the greatest challenge ever faced by humanity. This article explores the manner in which inequality encourages consumption, by drawing upon Thorstein Veblen’s theory of consumer behavior, whereby in societies in which fluid social mobility is believed possible, inequality encourages households to seek social certification and social status through consumption. Rising inequality strengthens the intensity with which households struggle to maintain social respectability through increased consumption. The ideology, institutions, and behavior generated by this focus on consumption reduce the potential for people to achieve certification of value through more environmentally friendly domains such as work and community. This article also addresses the manner in which inequality impedes responses aimed at reducing environmental damage by augmenting the political power of those whose interests would be harmed by environmental measures. Indeed, the wealthy benefit threefold from pollution: Their disproportionate consumption is made less expensive, their assets yield higher profits, and they are better able to shield themselves from the negative consequences of environmental destruction. |
| Keywords: | Conspicuous consumption, political power, ideology, work quality, community |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2010-09&r=pol |
| By: | Fernández, Raquel (New York University) |
| Abstract: | This paper reviews the literature on culture and economics, focusing primarily on the epidemiological approach. The epidemiological approach studies the variation in outcomes across different immigrant groups residing in the same country. Immigrants presumably differ in their cultures but share a common institutional and economic environment. This allows one to separate the effect of culture from the original economic and institutional environment. This approach has been used to study a variety of issues, including female labor force participation, fertility, labor market regulation, redistribution, growth, and financial development among others. |
| Keywords: | culture, beliefs, preferences, norms |
| JEL: | O10 Z1 D01 D1 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5122&r=pol |