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scenario, it makes sense for richer regions to devote resources to improve poor
regions' economies.
The amount of interregional transfers will be larger the higher the expected
level of population mobility. The creation of internally heterogeneous markets
such as the Single European Act facilitates potential migratory movements by
dependents, surplus labor, and transient minorities (such as Roma). The actual
realization of such migration depends primarily on the gap in terms of eco-
nomic performance between different regions of the Union. The wider this gap
the more likely it is for richer regions to face an inflow of migrants in search of
work, better welfare services, or even better charities. By transferring resources
to poorer regions, richer ones would improve their economic conditions, and
reduce the probability of suffering a demographic shock that would alter, as
analyzed previously, the distribution of income and the preferred level of redis-
tribution of the recipient region. In performing this function, large levels of
interregional redistribution become a tool for the preservation of decentralized
systems of interpersonal redistribution in contexts where a common market
encompasses very heterogeneous regions. Interregional redistribution operates
as a political and economic buffer that increases the incentives of
all
mem-
bers to remain in the Union. The italics in “all” highlight the fact that the
system of interregional redistribution reduces the risks faced by both rich and
poor member states, thereby making compatible an integrated market and a
set of highly heterogeneous systems of fiscal redistribution. Analyzed through
this prism, interregional redistribution in the EU is both a compensation, as
typically argued in the literature, and an insurance device.
7
In the next two
sections I evaluate this logic empirically: the third section studies limits to
the centralization of interpersonal redistribution, and the fourth focuses on the
political origins of interregional redistribution and its connection with the issue
of mobility within the Union.
ECONOMIC GEOGRAPHY AND THE LIMITS
TO INTERPERSONAL REDISTRIBUTION
As analyzed in detail in
Chapter 3
, the institutional design of the European
Union fits closely the profile of a political union with centrifugal represen-
tation. Put simply, no major alteration of the status quo in the area of fis-
cal redistribution occurs without the unanimous consent of its constituent
members. According to the theoretical argument developed above, given these
institutional conditions, an uneven economic geography would render pro-
posals towards the centralization of interpersonal redistribution politically
unfeasible. To assess these claims, this section proceeds as follows: first, I
7
In line with this logic, a rich literature has documented the design of the EU budget as the
product of a long series of intergovernmental bargains between the constituent members of
the Union (Carruba 1997; Lange
1993
; Mattila
2004
; Moravcsik
1998
; Pollack
2003
; Rodden
2002
; Weber
1999
).
