TY  - JOUR
AU  - Casella,Alessandra
TI  - Redistribution Policy: A European Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9258
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9258
L1  - http://www.nber.org/papers/w9258.pdf
N1  - Author contact info:
Alessandra Casella
Department of Economics
Columbia University
420 West 118 Street
New York, NY 10027
Tel: 212/854-2459
Fax: 212/854-8059
E-Mail: ac186@columbia.edu
AB  - Following the rationale for regional redistribution programs described in the official documents of the European Union, this paper studies a very simple multi-country model built around two regions: a core and a periphery. Technological spill-overs link firms' productivity in each of the two regions, and each country's territory falls partly in the core and partly in the periphery, but the exact shares vary across countries. We find that, in line with the EU view, the efficient regional allocation requires both national and international transfers. If migration is fully free across all borders, then optimal redistribution policy results from countries' uncoordinated policies, obviating the need for a central agency. But if countries have the option of setting even imperfect border barriers, then efficiency is likely to require coordination on both barriers and international transfers (both of which will be set optimally at positive levels). The need for coordination increases as the Union increases in size.
ER  -