Abstract
The paper develops an integrated political economy model in which individuals are distinguished by earning ability and an ascriptive characteristic, race. The policy space is a transfer payment to low-income workers financed by a flat tax on wages and an affirmative action constraint on firms' hiring decisions. The distribution of income and the policy are endogenous, with the latter being the outcome of a legislative bargaining game between three legislative blocs. The model provides support for the common claim that racial divisions reduce support for welfare expenditures, even when voters have color-blind preferences. We show that relatively advantaged members of both the majority and minority group benefit from the introduction of a second dimension of redistribution, while the less advantaged members of the majority are the principal losers.
Original language | English (US) |
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Pages (from-to) | 1789-1823 |
Number of pages | 35 |
Journal | Journal of Public Economics |
Volume | 90 |
Issue number | 10-11 |
DOIs | |
State | Published - Nov 1 2006 |
Keywords
- Affirmative action
- Fiscal redistribution
- Legislative bargaining
ASJC Scopus subject areas
- Finance
- Economics and Econometrics