Publicly Provided Private Goods and Redistribution: A General Equilibrium Analysis
Scandinavian Journal of Economics, 02/2002; 104(1):173-88, 2002, DOI: 10.1111/1467-9442.00277
Posted: 6 Sep 2014
Date Written: February 1, 2002
Public provision of private goods is examined within a self-selection framework where production depends on labor supply of different households and the level of public provision. It is shown that productivity and wage-structure effects can create a role for public provision, even if preferences are weakly separable between goods and leisure. Public provision of education may offer an intuitively appealing case for the production-side impacts. We also address the reasons for public provision in a dynamic, overlapping generations economy, whereby public provision may affect efficiency and social costs of redistribution of future generations as well.
Note: Copyright 2002 by the editors of the Scandinavian Journal of Economics.
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