We study the process by which subordinated regions of a country can obtain a more favourable political status. In our theoretical model a dominant and a dominated region first interact through a voting process that can lead to different degrees of autonomy. If this process fails then both...

Why do public-sector workers receive so much of their compensation in the form of pensions and other benefits? This paper presents a political economy model in which politicians compete for taxpayers' ’and government employees' votes by promising compensation packages, but some voters cannot...

The classic theory of fiscal federalism suggests that different people should have different governments. Yet, separate local governments with homogeneous constituents often end up doing poorly. This paper explains why and answers three questions: when regions are heterogeneous, what determines...

We explore the implications for the optimal degree of fiscal decentralization when peoples preferences for goods and services, which classic treatments of fiscal federalism (Oates, 1972) place in the purview of local governments, exhibit specific egalitarianism (Tobin, 1970), or solidarity. We...

Manipulation of government finances for the benefit of narrowly defined groups is usually thought to be limited to the part of the budget over which politicians exercise discretion in the short run, such as earmarks. Analyzing a revenue-sharing program between the central and local governments...

We present a tractable stochastic endogenous growth model that explains how social capital influences economic development. In our model, social capital increases citizens' awareness of government activity. Hence, it alleviates the electoral incentives to under- invest in education, whose...

We develop a model in which delinquents compete with each other in criminal activities but may benefit from being friends with other criminals by learning and acquiring proper know-how on the crime business. By taking the social network connecting agents as given, we study the subgame perfect...

Moral values influence individual behavior and social interactions. A specially significant instance is the case of moral values concerning work effort. Individuals determine what they take to be proper behaviour and judge the others, and themselves, accordingly. They increase their esteem -and...

To help explain differences between the US and EU "social contracts" as well as other cultural differences, we present a model of rational voting over redistribution where individual attitudes toward others are endogenously determined. Individuals differ in their productivities and their degree...

We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral work values. Individuals self-esteem and social consideration of others are endogenously determined comparing behaviors to moral...