Fractionalization and the Size of Government
38 Pages Posted: 21 Aug 2003
Date Written: July 2003
This paper studies the joint effect of fractionalization and inequality on the size of government. Within a political economy model of tax determination, I study the effect of voters with a group-based social conscience, so they care more about the well-being of those belonging to their own group than the rest of the population. Under general assumptions, both fractionalization and group antagonism reduce the support for redistribution. Whereas within a group inequality increases support for redistribution, inequality between groups has the opposite effect. All these results hold even if a poor group is in majority. Using a panel data set for the US constructed from micro data, I find support for the hypothesis that within a race inequality increases and between groups inequality decreases redistribution.
Keywords: Fractionalization, Political Economy, Inequality, Redistribution, Race
JEL Classification: D31, D72, E62, H20
Suggested Citation: Suggested Citation