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positive function of the ability of regional barons to extract resources and, by
implication, a negative function of the ability of national parties to resist their
pressure.
Finally, a word on the relationship between interregional economic exter-
nalities and different systems of representation. Whereas uneven geographies
of inequality and risk are magnified by centrifugal representation and muted
by centripetal representation, mobility and representation seem to have an
orthogonal relationship.
Mobility fosters interregional redistribution at any point of the represen-
tation scale. Indeed, large economic externalities undermine the incentives of
regional elites to protect their fiscal structures even under conditions of cen-
trifugal representation that grant these elites effective veto power. To see how
this process works, it is useful to compare the expected behavior of the elites of
the wealthier region of the union (B) in the absence of economic externalities
with their expected behavior when these externalities are at work.
Under institutional conditions that favor the relative power of regional ver-
sus national elites in a status quo of fragmented solidarity (SQ1), the absence
of interregional economic externalities implies that the leaders of wealthier
regions will reject proposals that limit their fiscal autonomy (D). However,
under the same institutional conditions, the emergence of large levels of inter-
regional mobility of dependents creates the conditions for them to accept an
institutional change from fiscal independence (D) to a hybrid system with large
levels of interregional transfers (H).
More generally, by fostering the levels of regional risk sharing, externalities
work to reduce the terms
n
−
r
in SQ2. As a result,
externalities work either to increase the probability that regional elites accept
a move toward more integrated fiscal structures (
(ϕ
r
−
ϕ
n
)
in SQ1 and
)inSQ1 or to reduce the
probability that the national elites accept a proposal to move toward more
decentralized fiscal structures in SQ2. Indeed, for sufficiently large levels of
regional risk sharing, the incentives of regional leaders to challenge a centralized
fiscal system decline decisively. In conclusion, higher levels of mobility facilitate
the adoption of more centralized redistributive systems regardless of the system
of representation in place.
To summarize, this section has analyzed in detail the process by which
different systems of representation mediate the effects of economic geography
on the decentralization of redistribution. I have also illustrated how the impact
of mobility on fiscal structures is orthogonal to the nature of the system of
representation.
α
SUMMARY OF HYPOTHESES
This concludes the theoretical study of the determinants of centralization of
interpersonal redistribution and the level of interregional redistribution. With
an eye toward the empirical sections of the topic, I close the chapter with a
summary of the main hypotheses emerging from the analysis.
