Majority voting in a model of means testing

Abstract

We study a model of endogenous means testing where households differ in their income and where the in-kind transfer received by each household declines with income. Majority voting determines the two dimensions of public policy: the size of the welfare program and the means-testing rate. We establish the existence of a sequential majority-voting equilibrium and show that the means-testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size. Furthermore, the set of subsidy recipients does not depend on households' preferences, but depends only on income heterogeneity. JEL codes: D70, D72, H20

Public Education Investment, Economic Growth and Welfare: A Political Economy Analysis with Preference Heterogeneity

“…Perceived as an instrument of redistribution and reduction of income inequality, public education expenditure has been at the center of many theoretical and empirical studies (Glomm & Ravikumar, 1996, 1998, 2003Eckstein & Zilcha, 1994;Benabou, 2000;Corcoran & Evans, 2010;Glomm et al, 2011;Cardak et al, 2020;Artige & Cavenaile, 2023). The focus of our study is the theoretical investigation of the relationship between public education and economic growth, taking into account the influence of parental altruism towards children.…”