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differences among individuals within regions, and income differences between
regions.
The economic geography of the union shapes actors' preferences about
the organization of redistribution in political unions
.
In the context of the two-dimensional space defined by income and regions, this
topic establishes that economic geography works through three mechanisms
that jointly shape actors' preferences. These are: the geography of income, the
geography of economic specialization, and the scope of cross-regional exter-
nalities (i.e., individual geographical mobility).
As I show in detail in the next chapter, the distribution of income in any
political union breaks into four groups: rich citizens in rich regions, poor
citizens in rich regions, rich citizens in poor regions, and poor citizens in poor
regions. These groups' preferences, I argue, reflect the underlying geography
of inequality. Provided that the level of inequality within regions is lower than
that of the union, wealthy citizens in richer regions have no incentive to agree
to a fiscal structure that transfers resources to other areas of the country.
Thus, they have much to fear from either a centralized system of interpersonal
redistribution or large levels of interregional redistribution.
Poor citizens in poor regions by contrast are the natural beneficiaries of inte-
grated fiscal structures. They support centralized fiscal structures that transfer
rents directly to them, paid for by wealthier citizens in other regions. However,
poor citizens in rich regions do not have the same incentives. They are better
off pursuing a decentralized system of interpersonal redistribution in which
they are the beneficiaries of fiscal transfers occurring only within their region
than engaging in class solidarity with the rest of the union. Simply put, region
trumps class for this subgroup of citizens.
The same principle applies to the rich citizens of poor regions. While they
might rather not directly finance a national system of public insurance, they
have incentives to extract as many resources as possible from their counterparts
from other regions. As a result, they support a decentralized fiscal structure with
significant levels of interregional redistribution, additional resources that will
benefit the local economy and ease their own fiscal burden.
In sum, when income and regional ascriptions overlap, actors' preferences
are defined by their individual redistributive motives. In contrast, in the pres-
ence of a mismatch between individual and regional ascriptions, the latter
dominate the former. This yields a rather intuitive scenario in which both rich
and poor regions within the union aim to maximize their political autonomy
and the amount of resources at their disposal.
On the basis of this template, I take one step further to try to understand the
set of circumstances under which regions behave counterintuitively. I identify
the conditions under which poor regions sacrifice income to preserve autonomy
and rich regions willingly engage in redistribution of resources toward other
members of the union. In doing so, the topic pays close attention to both
the possibility of alternative geographies of income, and, more importantly, to
