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Article dans une revue Economics Letters Année : 2021

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

Helmuth Cremer
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Justina Klimaviciute
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Résumé

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.
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Dates et versions

hal-03230587, version 1 (24-04-2023)

Licence

Paternité - Pas d'utilisation commerciale - CC BY 4.0

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Helmuth Cremer, Justina Klimaviciute, Pierre Pestieau. A political economy of loose means-testing in targeted social programs. Economics Letters, 2021, 202, pp.109810. ⟨10.1016/j.econlet.2021.109810⟩. ⟨hal-03230587⟩
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