Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say's law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect...

Whether observed differences in redistributive policies across countries are the result of differences in social preferences or efficiency constraints is an important question that paves the debate about the optimality of welfare regimes. To shed new light on this question, we estimate labor...

The EU Directive on Free Movement of 2004 extended free movement within the EU to Union citizens who are inactive and gave them access to the welfare benefits of host countries. The paper examines the extent to which these measures provoke migration to those countries with the highest levels of...

Why might the European member states seek for Fiscal Union? Coordination, macro-stability purposes and provision of (European) public goods are certainly goals of paramount importance for the implementation of Fiscal Union at European level. However, there is an equally important component of...

In European Welfare States, low-skilled workers are typically unionized, while the wage formation of high-skilled workers is more competitive. To focus on this aspect, we analyze how flexible international outsourcing and labour taxation affect wage formation, employment and welfare in dual...

It is often argued that tax competition may lead to a ‘race to the bottom'. This result may indeed hold in the case of factor mobility (such as capital). However, in this paper we emphasize the unique feature of labor migration, that may nullify the'race to the bottom' hypothesis. Labor...

There is clear evidence that fairness plays a role in redistribution. Individuals want to compensate others for their misfortune, while they allow them to enjoy the fruits of their effort. This paper introduces fairness in a tax-benefit scheme that is based on several characteristics in order to...

Real local government spending in the United States has increased by 240% between 1972 and 2012, faster than can be explained by population growth (a 48% increase), growth in median household income (a 32% increase), or changes in other economic, demographic, and institutional variables...

No voters cast their votes based on perfect information, but better educated and richer voters are on average better informed than others. We develop a model where the voting mistakes resulting from low political knowledge reduce the weight of poor voters, and cause parties to choose political...

Baumol's cost disease states that relatively high productivity growth in manufacturing induces a steady increase in the relative price of human services. If demand for these services is inelastic or manufactured goods are necessities, the budget share of these services inexorably rises over time...