Fractionalization and the Size of Government

38 Pages Posted: 21 Aug 2003

See all articles by Jo Thori Lind

Jo Thori Lind

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 2003

Abstract

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

Lind, Jo Thori, Fractionalization and the Size of Government (July 2003). Available at SSRN: https://ssrn.com/abstract=432908

Jo Thori Lind (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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