Hostname: page-component-8448b6f56d-t5pn6 Total loading time: 0 Render date: 2024-04-17T15:57:12.664Z Has data issue: false hasContentIssue false
  • English
  • Français

Inequality and the Territorial Fragmentation of Solidarity

Published online by Cambridge University Press:  04 October 2007

Pablo Beramendi
Pablo Beramendi
Affiliation:
Duke University, E-mail: pablo.beramendi@duke.edu
Get access

Abstract

A long tradition of research has shown decentralized political structures as an important cause behind lower levels of redistribution and higher levels of inequality. This article offers an alternative interpretation of the association between fragmented fiscal structures and higher levels of inequality. I argue that the distributive effects of decentralization depend on the preexisting territorial patterns of inequality. Therefore, the political choice between alternative fiscal structures is largely driven by their expected distributive consequences. As a result, the territorial structure of inequality becomes an important factor to explain why some fiscal structures are more integrated than others. Two mechanisms link regional income distributions and preferences about the decentralization of redistributive policy: differences in the demand for redistribution associated with interregional income differences, and differences in the demand for social insurance associated with the incidence of labor market risks. I test the argument using a data set of fourteen countries in the Organization for Economic Cooperation and Development (OECD) over the period 1980–2000. In addition, I illustrate the potential of the approach by analyzing why social solidarity remains territorially fragmented in the European Union despite the fact that it has a common currency and a common market.Previous versions of this article were presented in seminars at Cornell University, Syracuse University, Duke University, and the 2005 APSA meetings. I benefited from comments in all these events. In addition, I thank Christopher Anderson, Tony Atkinson, Neal Beck, Carles Boix, Matt Cleary, Thomas R. Cusack, Alberto Diaz-Cayeros, Gösta Esping-Andersen, Kai Konrad, Mitchell Orenstein, Jonas Pontusson, Adam Przeworski, Jonathan Rodden, David Rueda, David Soskice, Ernesto Stein, Duane Swank, Daniel Treisman, Brian Taylor, Michael Wallerstein, and Erik Wibbels for their very helpful comments on earlier versions. Krishna Ayyangar provided excellent research assistance. Finally, I want to thank Lisa Martin and two anonymous reviewers for their very helpful suggestions. Financial support from the Juan March Institute, Nuffield College (Oxford), the Wissenschaftszentrum Berlin and the Center for Policy Research (Syracuse University) is gratefully acknowledged. The usual disclaimer applies.

Type
Research Article
Information
International Organization , Volume 61 , Issue 4 , October 2007 , pp. 783 - 820
Copyright
© 2007 The IO Foundation and Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Alesina, Alberto, Ignazio Angeloni, and Federico Etro. 2005. International Unions. American Economic Review 95 (3):602–15.CrossRefGoogle Scholar
Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001. Why Doesn't the US Have a European-Style Welfare State? Discussion Paper 1933. Cambridge, Mass.: Harvard Institute of Economic Research, Harvard University.
Alesina, Alberto, and Roberto Perotti. 1998. Economic Risk and Political Risk in Fiscal Unions. Economic Journal 108 (449):989–1008.CrossRefGoogle Scholar
Alesina, Alberto, and Enrico Spolaore. 2003. The Size of Nations. Cambridge, Mass.: MIT Press.
Alston, Lee J., and Joseph P. Ferrie. 1999. Southern Paternalism and the American Welfare State: Economics, Politics, and Institutions in the South, 1865–1965. Cambridge: Cambridge University Press.
Arzaghi, Mohammad, and J. Vernon Henderson. 2005. Why Countries Are Fiscally Decentralizing? Journal of Public Economics 89 (7):1157–89.Google Scholar
Atkinson, Anthony Barnes. 1995. Incomes and the Welfare State: Essays on Britain and Europe. Cambridge: Cambridge University Press.
Atkinson, Tony. 2002. Social Inclusion and the European Union. Journal of Common Market Studies 40 (4):625–43.CrossRefGoogle Scholar
Baltagi, Badi Hani. 1995. Econometric Analysis of Panel Data. New York: Wiley.
Beck, Nathaniel, and Jonathan N. Katz. 1995. What to Do (and Not to Do) with Time-Series Cross-Section Data. American Political Science Review 89 (3):634–47.CrossRefGoogle Scholar
Beramendi, Pablo. 2006. Fragmented Solidarity: Distributive Politics in Multitiered Systems. Unpublished manuscript, Syracuse University, Syracuse, N.Y.
Boix, Carles. 2003. Democracy and Redistribution. Cambridge: Cambridge University Press.
Bolton, Patrick, and Gérard Roland. 1996. Distributional Conflicts, Factor Mobility, and Political Integration. American Economic Review 86 (2):99–104.Google Scholar
Bolton, Patrick, and Gérard Roland. 1997. The Breakup of Nations: A Political Economy Analysis. Quarterly Journal of Economics 112 (4):1057–90.CrossRefGoogle Scholar
Buchanan, James M. 1995. Federalism as an Ideal Political Order and an Objective for Constitutional Reform. Publius 25 (2):19–27.CrossRefGoogle Scholar
Cai, Hongbin, and Daniel Treisman. 2005. Does Competition for Capital Discipline Governments? Decentralization, Globalization and Public Policy. American Economic Review 95 (3):817–30.CrossRefGoogle Scholar
Cameron, David R. 1978. The Expansion of the Public Economy: A Comparative Analysis. American Political Science Review 72 (4):1243–61.CrossRefGoogle Scholar
Carrubba, Clifford J. 1997. Net Financial Transfers in the European Union: Who Gets What and Why? The Journal of Politics 59 (2):469–96.Google Scholar
Casella, Alessandra. 1992. On Markets and Clubs: Economic and Political Integration of Regions with Unequal Productivity. American Economic Review 82 (2):115–21.Google Scholar
Casella, Alessandra, and Barry R. Weingast. 1995. Elements for a Theory of Jurisdictional Change. In Politics and Institutions in an Integrated Europe, edited by Barry Eichengreen, Jeffry Frieden, and Jürgen Von Hagen, 11–41. New York: Springer-Verlag.
Chhibber, Pradeep, and Ken Kollman. 2004. The Formation of National Party Systems: Federalism and Party Competition in Canada, Great Britain, India, and the United States. Princeton, N.J.: Princeton University Press.
Díaz-Cayeros, Alberto. 2006. Federalism, Fiscal Authority, and Centralization in Latin America. Cambridge: Cambridge University Press.
Dixit, Avinash, and John Londregan. 1998. Fiscal Federalism and Redistributive Politics. Journal of Public Economics 68 (2):153–80.CrossRefGoogle Scholar
Estevez-Abe, Margarita, Torben Iversen, and David Soskice. 2001. Social Protection and the Formation of Skills: A Reinterpretation of the Welfare State. In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, edited by Peter A. Hall and David Soskice, 145–83. Oxford, England: Oxford University Press.
European Commission (EC). 2000. Allocation of EU Expenditure by Member State. Brussels: EC.
European Commission (EC). 2004. Allocation of EU Expenditure by Member State. Brussels: EC.
Garrett, Geoffrey, and Jonathan Rodden. 2003. Globalization and Fiscal Decentralization. In Governance in a Global Economy: Political Authority in Transition, edited by Miles Kahler and David A. Lake, 87–109. Princeton, N.J.: Princeton University Press.
Greene, William H. 2000. Econometric Analysis. 4th ed. Upper Saddle River, N.J.: Prentice Hall.
Hiscox, Michael J., and Stephanie J. Rickard. 2002. Birds of a Different Feather? Varieties of Capitalism, Factor Specificity, and Interindustry Labor Movements. Unpublished manuscript, Harvard University, Cambridge, Mass.
Hix, Simon. 2005. The Political System of European Union. 2d ed. New York: Palgrave Macmillan.
Huber, Evelyne, Charles Ragin, and John D. Stephens. 1993. Social Democracy, Christian Democracy, Constitutional Structure and the Welfare State. American Journal of Sociology 99 (3):711–49.CrossRefGoogle Scholar
Huber, Evelyne, and John D. Stephens. 2001. Development and Crisis of the Welfare State: Parties and Policies in Global Markets. Chicago: University of Chicago Press.
Inman, Robert P., and Daniel L. Rubinfeld. 1997. The Political Economy of Federalism. In Perspectives of Public Choice: A Handbook, edited by Dennis C. Mueller, 73–105. Cambridge: Cambridge University Press.
Iversen, Torben, and David Soskice. 2001. An Asset Theory of Social Policy Preferences. American Political Science Review 95 (4):875–93.Google Scholar
Kenworthy, Lane. 2001. Wage-Setting Measures: A Survey and Assessment. World Politics 54 (1):57–98.CrossRefGoogle Scholar
King, Gary, Robert O. Keohane, and Sidney Verba. 1994. Designing Social Inquiry: Scientific Inference in Qualitative Research. Princeton, N.J.: Princeton University Press.
König, Thomas. 2005. Measuring and Analysing Positions on European Constitution-building. European Union Politics 6 (3):259–67.CrossRefGoogle Scholar
Lange, Peter. 1993. Maastricht and the Social Protocol: Why Did They Do It? Politics & Society 21 (1):5–36.Google Scholar
Lindert, Peter H. 2004. Growing Public: Social Spending and Economic Growth Since the Eighteenth Century. New York: Cambridge University Press.
Linz, Juan J. 1997. Democracy, Multinationalism and Federalism. Working Paper 103. Madrid, Spain: Center for Advanced Study in the Social Sciences, Juan March Institute.
Linz, Juan J., and Alfred Stepan. 2000. Inequality Inducing and Inequality Reducing Federalism: With Special Reference to the Classic “Outlier”– the USA. Paper presented at the 18th Meeting of the World Congress of the International Political Science Association, August, Quebec City, QC.
Majone, Giandomenico. 1993. The European Community Between Social Policy and Social Regulation. Journal of Common Market Studies 31 (2):153–70.CrossRefGoogle Scholar
Mares, Isabela. 2003. The Politics of Social Risk: Business and Welfare State Development. Cambridge: Cambridge University Press.
Mattila, Mikko. 2004. Fiscal Redistribution in the European Union and the Enlargement. International Journal of Organization Theory and Behavior 7 (4):555–70.CrossRefGoogle Scholar
Mattli, Walter. 1999. The Logic of Regional Integration: Europe and Beyond. New York: Cambridge University Press.
Meltzer, Allan H., and Scott F. Richard. 1981. A Rational Theory of the Size of Government. Journal of Political Economy 89 (5):914–27.CrossRefGoogle Scholar
Moene, Karl Ove, and Michael Wallerstein. 2001. Inequality, Social Insurance, and Redistribution. American Political Science Review 95 (4):859–74.Google Scholar
Moravcsik, Andrew. 1998. The Choice for Europe: Social Purpose and State Power from Messina to Maastricht. Ithaca, N.Y.: Cornell University Press.
Oates, Wallace E. 1972. Fiscal Federalism. New York: Harcourt Brace Jovanovich.
Oates, Wallace E. 1999. An Essay on Fiscal Federalism. Journal of Economic Literature 37 (3):1120–49.CrossRefGoogle Scholar
Obinger, Herbert, Stephan Leibfried, and Francis G. Castles, eds. 2005. Federalism and the Welfare State: New World and European Experiences. Cambridge: Cambridge University Press.
Panizza, Ugo. 1999. On the Determinants of Fiscal Centralization: Theory and Evidence. Journal of Public Economics 74 (1):97–139.CrossRefGoogle Scholar
Persson, Torsten, and Guido Tabellini. 1996a. Federal Fiscal Constitutions: Risk Sharing and Redistribution. Journal of Political Economy 104 (5):979–1009.Google Scholar
Persson, Torsten, and Guido Tabellini. 1996b. Federal Fiscal Constitutions: Risk Sharing and Moral Hazard. Econometrica 64 (3):623–46.Google Scholar
Persson, Torsten, and Guido Tabellini. 2000. Political Economics: Explaining Economic Policy. Cambridge, Mass.: MIT Press.
Persson, Torsten, and Guido Tabellini. 2003. The Economic Effects of Constitutions. Cambridge, Mass.: MIT Press.
Peterson, Paul E. 1995. The Price of Federalism. Washington, D.C.: Brookings Institution.
Peterson, Paul E., and Mark C. Rom. 1990. Welfare Magnets: A New Case for a National Standard. Washington, D.C.: Brookings Institution.
Pierson, Paul. 1996. The Path to European Integration: A Historical Institutionalist Analysis. Comparative Political Studies 29 (2):123–63.CrossRefGoogle Scholar
Prud'homme, Rémy. 1995. The Dangers of Decentralization. World Bank Research Observer 10 (2):201–20.CrossRefGoogle Scholar
Przeworski, Adam. 2004. Some Historical, Theoretical, and Methodological Issues in Identifying Effects of Political Institutions. Working paper, New York University, New York.
Qian, Yingyi, and Barry R. Weingast. 1997. Federalism as a Commitment to Preserving Market Incentives. Journal of Economic Perspectives 11 (4):83–92.CrossRefGoogle Scholar
Roberts, Kevin W.S. 1977. Voting Over Income Tax Schedules. Journal of Public Economics 8 (3):329–40.CrossRefGoogle Scholar
Rodden, Jonathan. 2002. Strength in Numbers?: Representation and Redistribution in the European Union. European Union Politics 3 (2):151–75.CrossRefGoogle Scholar
Rodden, Jonathan. 2004. Comparative Federalism and Decentralization: On Meaning and Measurement. Comparative Politics 36 (4):481–500.CrossRefGoogle Scholar
Rodden, Jonathan. 2006. Hamilton's Paradox: The Promise and Peril of Fiscal Federalism. Cambridge: Cambridge University Press.
Rodrik, Dani. 1998. Why Do More Open Economies Have Bigger Governments? Journal of Political Economy 106 (5):997–1032.Google Scholar
Rogowski, Ronald, and Duncan C. MacRae. 2004. Inequality and Institutions: What Theory, History and (Some) Data Tell Us. Paper presented at the 100th Annual Meeting of the American Political Science Association, September, Chicago.
Romer, Thomas. 1975. Individual Welfare, Majority Voting, and the Properties of a Linear Income Tax. Journal of Public Economics 4 (2):163–85.CrossRefGoogle Scholar
Rose-Ackerman, Susan. 1981. Does Federalism Matter? Political Choice in a Federal Republic. Journal of Political Economy 89 (1):152–65.CrossRefGoogle Scholar
Sánchez-Cuenca, Ignacio. 2000. The Political Basis of Support for European Integration. European Union Politics 1 (2):147–71.CrossRefGoogle Scholar
Scharpf, Fritz Wilhelm. 1999. Governing in Europe: Effective and Democratic? Oxford, England: Oxford University Press.
Scharpf, Fritz Wilhelm. 2002. The European Social Model: Coping with the Challenges of Diversity. Journal of Common Market Studies 40 (4):645–70.CrossRefGoogle Scholar
Sinn, Hans-Werner. 1995. A Theory of the Welfare State. Scandinavian Journal of Economics 97 (4):495–526.CrossRefGoogle Scholar
Stepan, Alfred C. 2001. Arguing Comparative Politics. Oxford: Oxford University Press.
Vandenbroucke, Frank. 2002. The EU and Social Protection: What Should the European Convention Propose? Working Paper 02/6. Köln, Germany: Max Planck Institute for the Study of Societies.
Varian, Hal R. 1980. Redistributive Taxation as Social Insurance. Journal of Public Economics 14 (1):49–68.CrossRefGoogle Scholar
Wallis, John Joseph, and Wallace E. Oates. 1988. Decentralization in the Public Sector: An Empirical Study of State and Local Government. In Fiscal Federalism: Quantitative Studies, edited by Harvey S. Rosen, 5–28. Chicago: University of Chicago Press.
Weingast, Barry R. 1995. The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development. Journal of Law, Economics, & Organization 11 (1):1–31.Google Scholar
Wibbels, Erik. 2005. Federalism and the Market: Intergovernmental Conflict and Economic Reform in the Developing World. Cambridge: Cambridge University Press.
Wildasin, David E. 1995. Factor Mobility, Risk and Redistribution in the Welfare State. Scandinavian Journal of Economics 97 (4):527–46.CrossRefGoogle Scholar