Nicolas Gravel

Does endogenous formation of jurisdictions lead to wealth-stratification?

This paper examines the validity of the “folk” intuition that endogenous formation of jurisdictions is likely to create stratification of households according to their wealth. More specifically, we examine a simple model of jurisdiction formation, close in spirit to that of Whestoff ([27]), in which a continuum of unequally wealthy households endowed with the same preferences for one public good and one private good make a location decision in a finite set. Households who choose the same location form a jurisdiction. Within each jurisdiction, the public good is financed by a proportional wealth tax whose rate is decided by a social choice mechanism. The only assumption imposed on the mechanism is to select the most preferred tax rate of one member of the jurisdiction. We define a jurisdiction structure to be stable if it gives to no household any incentive to move away from its jurisdiction. We raise the question of whether stable jurisdiction structures will be stratified in the precise sense that if two households belong to one jurisdiction, then so do all households with intermediate wealth. We provide a necessary and, if households preferences satisfy an additional regularity property, sufficient condition on the households preferences that guarantees that any stable jurisdictions structure involves stratification in this sense. The condition is that the household’s most preferred tax rate must be a strictly monotonic function of its wealth.

Comparing Societies with Different Numbers of Individuals on the Basis of Their Average Advantage

At an abstract level, one can view the various theories of justice that have been discussed in economics and philosophy in the last 50 years or so, including of course that of Serge-Christophe Kolm (2005), as attempts at providing criteria for comparing alternative societies on the basis of their “ethical goodness.” The compared societies can be truly distinct societies, such as India and China. They can also be the same society examined at two different points of time (say India today and India 20 years ago) or, more counterfactually, before and after a tax reform or demographic shock.

The segregative properties of endogenous formation of jurisdictions with a welfarist central government

This paper examines the segregative properties of Tiebout-type process of jurisdiction formation by freely mobile households in the presence of a central government which makes equalization transfers across jurisdictions so as to maximize a generalized utilitarian or a max–min objective. It is shown that the introduction of such a central government significantly affects the set of stable jurisdiction structures. It is also shown that the class of households additively separable preferences that guarantees the wealth segregation of any stable jurisdiction structure is unaffected by the presence of a central government if this government uses a generalized utilitarian objective.