Geoscience Reference
In-Depth Information
w
i
t
∗
>
0
t
∗
0
T > 0
T = 0
Individual
Income
w
t
∗
t
∗
1
1
T > 0
T = 0
0
w
A (
w
A
<
w
;
A
>
0)
B (
w
B
>
w
;
B
=
0)
δ
δ
Regional Income
FIGURE 2.3. Preferences for Fiscal Structures When the Poor Region Is Highly
Specialized
the diversity of economic activities across regions facilitate the formation of
intra-regional cross-class coalitions and, conversely, undermine the likelihood
of interregional class-based coalitions. This pattern of alliances links to prefer-
ences about the territorial articulation of the fiscal system: other things being
equal, a diverse geography of risk increases the pressure in favor of a decen-
tralized system of interpersonal redistribution and tilts political contentions
toward a conflict over the scope of interregional redistribution. How these
contentions are resolved depends not only on the geography of risks but also
on the level and nature of mobility across regional borders.
MOBILITY AND THE ORGANIZATION OF FISCAL STRUCTURES:
INTERREGIONAL REDISTRIBUTION AS INSURANCE
TO PROTECT AUTONOMY
Cross-regional economic externalities emerge from events, such as external
shocks, whose consequences transcend specific members of the union. To the
extent that there are cross-regional economic externalities, the risk profiles of
different regions become less distinctive from one another. This affects their
preferences for the design of fiscal structures. As follows, I investigate the
connection between externalities, economic specialization, and the selection of
fiscal structures.
9
9
In this section, I rely on the same model of individual preferences as in the previous section (see
Appendix A for a formal presentation).
