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The Survival of the Welfare State
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Universitat Pompeu Fabra.
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2002 (English)Report (Other academic)
Abstract [en]

This paper provides an analytical chracterization of Markov perfect equilibria in a politico-economic model with repeated voting, where agents vote over distortionary incom redistribution. The key feature of the theory is that the future constituency of redistributive policies depends positively on the current level of redistribution, since this affects both private investments and the future distribution of voters. Agents vote rationally and fully anticipate the effects of their political choice on both private incentives and future voting outcomes. The model features multiple equilibria. In "pro-welfare" equilibria, both welfare state policies and their effects on distribution persist forever. In "anti-welfare equilibria", eben a majority of beneficiaries of redistributive policies vote strategically so as to induce formation of a future majority that will vote for zero redistribution.

Place, publisher, year, edition, pages
Stockholm: IIES , 2002. , 49 p.
Series
Seminar Paper / Institute for International Economic Studies, Stockholm University. (Online), ISSN 1653-610X
Keyword [en]
repeated voting, Markov equlibrium, multiple equilibria, welfare state, redistribution, political economy, policy persistence, wage inequality, education
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-41189OAI: oai:DiVA.org:su-41189DiVA: diva2:328963
Available from: 2010-07-07 Created: 2010-07-07 Last updated: 2016-04-08Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf