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Welfare Magnets, The Labor-Leisure Decision and Economic Efficiency

Saving, Jason (1994) Welfare Magnets, The Labor-Leisure Decision and Economic Efficiency. Social Science Working Paper, 890. California Institute of Technology , Pasadena, CA. (Unpublished)

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This paper develops a model designed to capture the fiscal externalities associated with redistributive policy in a system of jurisdictions. Policy changes in one jurisdiction affect other jurisdictions through both migration and work-disincentive effects. Previous work ignores work-disincentive effects and concludes that centralization is sufficient to eliminate fiscal externalities. Inclusion of work-disincentive effects unambiguously worsens fiscal externalities under both centralized and decentralized redistribution. Sufficiently severe work-disincentive effects guarantee that an increase in redistribution will harm the poor.

Item Type:Report or Paper (Working Paper)
Additional Information:I would like to thank Peter Mieszkowski, Thomas R. Saving and participants at the 1994 annual meetings of the Public Choice Society for helpful comments and suggestions. Any remaining errors are my own.
Group:Social Science Working Papers
Subject Keywords:Migration, redistribution, spillovers, externalities, centralization
Series Name:Social Science Working Paper
Issue or Number:890
Classification Code:JEL: H23, H73
Record Number:CaltechAUTHORS:20170822-143609973
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80692
Deposited By: Jacquelyn Bussone
Deposited On:23 Aug 2017 18:09
Last Modified:03 Oct 2019 18:34

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