Geoscience Reference
In-Depth Information
specific transfers of resources from wealthier to poorer regional governments
(interregional redistribution).
19
In either case, the disaggregating push of an uneven geography of inequality
is contained by a set of political incentives to either build or sustain a proredis-
tributive coalition that cuts across territorial boundaries. As a result, this topic
argues, centripetal representation limits the extent to which an uneven eco-
nomic geography undermines redistributive efforts and reproduces itself over
time.
Given some level of decentralization of interpersonal redistribution,
interregional labor mobility conditions regional preferences for inter-
regional redistribution; high levels of mobility create incentives for
wealthier regions to accept larger interregional transfers toward poorer
areas.
This topic contends that interregional mobility is a key factor in the process of
selection of fiscal structures. The idea of a
race to the bottom
constraining the
growth of government is a popular image that presents incumbents as individ-
uals subject to the constraints imposed by highly mobile economic factors. Yet
mobility is not an option for everyone. Highly specialized workers find it hard
to move outside their industries. Because industries tend to be clustered geo-
graphically, labor mobility is inversely related to asset specificity and economic
specialization (Boix
2003
; Krugman
1991
; Lucas
1990
). In contrast, unskilled
workers and those citizens permanently dependent on public transfers, such
as low- to middle-income pensioners, are more likely to move in response to
welfare and income differences between territories
20
High levels of mobility, in
particular of workers and long-term dependents, do not operate as an external
constraint on the behavior of regional and federal incumbents. Instead, high
levels of mobility work as a multiplier of social risks across regions, thereby
creating political incentives to increase levels of redistribution between regions.
Specifically, I posit (and show empirically) that the threat of a large inflow
of dependents can cause rich regions, rather counterintuitively, to accept more
interregional redistribution. This is particularly the case when richer regions
are also specialized, and therefore perceive mobility as an undesirable shock
19
As we shall see in the case of Germany, it may be the case that the pivotal group of voters
is itself concentrated in specific regions (the East). Under these circumstances the union will
redistribute resources to its poorer members in two ways: indirectly, by virtue of the geographi-
cal concentration of beneficiaries of interpersonal redistribution, and directly, via interregional
transfers.
20
Under certain circumstances this may trigger a race to the bottom. For instance, Rom, Peterson,
and Scheve (1996) find evidence of such processes in the United States during 1976-1994
concerning Aid to Families with Dependent Children (AFDC). In other policies, however, the
race turns toward the
top
: when the region of Catalonia (Spain) decided to pass a supplement
to the pensions of those residents in Catalonia who had not previously contributed to social
security, the national government matched the increase nationwide shortly thereafter (Arriba
1999). Clearly, with selective patterns of mobility, the magnitude and direction of whatever
race states enter becomes a policy-specific, group-specific phenomenon (Volden
2004
,
2005
).
