An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities
Cost equalisation, which redistributes income from low to high cost sub-national regions,is practised in many unitary and federal countries as part of broader schemes designed toequalise scal capacities. While these policies are motivated by equity, in this paper I showthat under plausible circumsta...
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| Format: | Working Paper |
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School of Economics and Finance, CBS
2015
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| Online Access: | http://hdl.handle.net/20.500.11937/39345 |
| _version_ | 1848755566556479488 |
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| author | Petchey, Jeffrey |
| author_facet | Petchey, Jeffrey |
| author_sort | Petchey, Jeffrey |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Cost equalisation, which redistributes income from low to high cost sub-national regions,is practised in many unitary and federal countries as part of broader schemes designed toequalise scal capacities. While these policies are motivated by equity, in this paper I showthat under plausible circumstances cost equalisation enhances economic eciency. Therationale for this striking result has to do with the way that cost dierences across regionsinteract with externalities caused by migration and the role of inter-regional transfers as acorrective instrument. By providing an eciency rationale for cost equalisation, the paperbuilds a more eective bridge between the theory and practice of scal equalisation. |
| first_indexed | 2025-11-14T08:58:21Z |
| format | Working Paper |
| id | curtin-20.500.11937-39345 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:58:21Z |
| publishDate | 2015 |
| publisher | School of Economics and Finance, CBS |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-393452017-01-30T14:33:10Z An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities Petchey, Jeffrey inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism Cost equalisation, which redistributes income from low to high cost sub-national regions,is practised in many unitary and federal countries as part of broader schemes designed toequalise scal capacities. While these policies are motivated by equity, in this paper I showthat under plausible circumstances cost equalisation enhances economic eciency. Therationale for this striking result has to do with the way that cost dierences across regionsinteract with externalities caused by migration and the role of inter-regional transfers as acorrective instrument. By providing an eciency rationale for cost equalisation, the paperbuilds a more eective bridge between the theory and practice of scal equalisation. 2015 Working Paper http://hdl.handle.net/20.500.11937/39345 School of Economics and Finance, CBS fulltext |
| spellingShingle | inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism Petchey, Jeffrey An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title | An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title_full | An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title_fullStr | An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title_full_unstemmed | An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title_short | An Efficiency Case for Cost Equalisation in a Regional Economy with Migration Externalities |
| title_sort | efficiency case for cost equalisation in a regional economy with migration externalities |
| topic | inter-governmental differentials and - their effects federal state relations intergovernmental relations federalism |
| url | http://hdl.handle.net/20.500.11937/39345 |