A political economy of loose means-testing in targeted social programs

Cremer, Helmuth;Klimaviciute, Justina;Pestiau, Pierre
(2020) , 9 pages

Files

COREDP-2020_36.pdf
  • Open Access
  • Adobe PDF
  • 2.16 MB
Download

Details

Authors
  • Cremer, HelmuthToulouse School of Economics, University of Toulouse Capitole, France
    Author
  • Klimaviciute, JustinaFaculty of Economics and Business Administration, Vilnius University, Lithuania.
    Author
  • Pestiau, PierreUCLouvain
    Author
Abstract
This paper studies the political sustainability of programs that are targeted towards the poor. Given that the poor to whom these programs cater do not constitute a majority, we show that for their own good it pays to let the middle class benefit from them in a random way. This approach mimics the actual institutional arrangements whereby middle-class individuals feel that they can successfully apply to the programs. We consider a two stage decision process: first a Rawlsian government chooses the probability at which the middle class is allowed to benefit from a given program; then, majority voting determines the level of benefit and the rate of contribution. At the first, constitutional stage, the government cannot commit to a specific level of taxes and benefit but anticipates that these are set by majority voting in the second stage.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Cremer, H., Klimaviciute, J., & Pestiau, P. (2020). A political economy of loose means-testing in targeted social programs (CORE Discussion Paper 2020/36). https://hdl.handle.net/2078.5/122891