1. Income Redistribution and Public Good Provision in a Diverse Society
Selim Jürgen Ergun
Universidad de Granada
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2. Aim
To analyze the post-electoral coalition formation process in a two dimensional political environment and to find which stable coalitions might form and the set of policies they would implement
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3. Introduction
Preference heterogeneity → Formation of parties → Multidimensional political competition → Government (coalition) formation
In this paper
Two dimensional political environment: degree of income taxation and the provision of a group specific public good
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4. Introduction A society consisting of three different groups
Three parties, each one representing a specific group, with objectives:
Mainly office motivated, and only instrumentally caring about policy (Aragonès 2007)
Both office and policy motivated
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5. Timing of the Game Each party makes a policy announcement
Voters cast their vote
Votes are transformed into seats where “ideal proportionality” applies
Coalition government is formed, office spoils are shared and policy is implemented
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6. Voters
A finite number of citizens, N, consisting of three groups R, P, E with size of nR, nP, nE respectively
The utilities of these three groups:
yR, yP: incomes, t: tax rate, T: transfer, g: level of public good
k measures the degree of diversity (k>0)
v(g) linear or concave
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7. Parties
Three parties, R, P, E, each representing the corresponding group
Parties care only instrumentally about policy:
C: coalition government
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8. Budget Constraint/Indifference Curves
The budget constraint of the government: (y is average income)
Indifference Curves
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9. Indifference Curves g=Ny g=Ny g=Ny t=0 t=1 t=0 t=1 t=0 t=1
Indifference Curves of R
Indifference
Curves of P
Indifference
Curves of E (v(g) concave)
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10. Pareto Sets g=Ny g=Ny t=0 t=1 t=0 t=1 v(g) concave v(g) linear
Pareto Set PE
Pareto Set PE
Pareto Set RE
Pareto Set RE
t=0
t=1
t=0
t=1
Pareto Set PR
Pareto Set PR
v(g) concave
v(g) linear
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11. Main Results
A stable coalition exists if the value of holding office is sufficiently large.
A stable coalition is more likely if:
The degree of diversity is lower
The level of income of the rich group is lower
The distribution of seat shares is more unequal
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12. Other Results
The set of policies that can be implemented by a stable coalition is larger
The lower the level of income of the rich
The lower the degree of diversity whenever the ethnic minority forms part of the government
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13. Policy and Office Motivated Parties
As before, for stable coalitions to exist the benefits of office should be large enough
Now, the critical value of B might be smaller
Intuition: The party outside the government would be willing to “give less” to the parties in the government
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14. Solely Office Motivated Parties
If parties were only policy motivated, no stable coalition would exist
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15. Conclusions
For stable coalitions to exist, the benefits of office should be large enough.
This critical value depends on the degree of diversity and the income levels
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16. Conclusions
This result can help to explain the following observations:
In some countries the coalition formation process takes a short time in others not
The duration of coalition governments varies from country to country
Short process and higher probability of stability if incomes are more equal and degree of diversity is lower
Bandiera and Levy (2007)
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17. Further Research Disutility from forming a coalition Strategic voters
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