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Political economy of income redistribution and incentives - the role of information


Research objectives and content
The aim of this work will be that of studying the redistributive effects of public policies and especially the extent of income redistribution as a social decision. The analysis will be mainly theoretical but formal econometric tests of theoretical models will be carried out. From a theoretical point of view the role of uncertainty about the consequences of different fiscal platforms will be particularly stressed. Agents will be considered in a stochastic environment in which they play a game both on market and political institutions. Of course different visions on the consequences of policies are rationalizable. The traditional median voter result may be reconsidered in this framework. From this positive theoretical analysis it should be possible to derive some testable propositions in order to carry out empirical tests. A quite promising possibility seems to be the use of microdata from large surveys, that would enable us to carry out a proper redistributive analysis. Some possibilities are the Families' Expenditure Survey for U.K. or the Families' Budget Survey of Banca d'ltalia, for Italy. Even if this kind of data have been largely employed to study the redistributive impact of fiscal reforms, I don't think they have been used for testing models of political economy. From this empirical analysis I hope to have also useful insights on the distribution of some kind of taxes and benefits across the population. A short normative analysis will also be carried out at the end.
Training content (objective, benefit and expected impact)
The training at LSE will be of fundamental importance. The research will require a very good knowledge of game theory and in particular of the literature on imperfect information. Other mathematical methods concerning fixed point arguments and dynamic programming are likely to be needed during the theoretical analysis. For the empirical section
microeconometrics methods will be necessary, in particular panel data analysis (it will be probably necessary the use of techniques for binary data and limited dependent variables). The School provides a large number of courses on these technical subjects and their attendance (with examinations) is a part of the research programme. Moreover the School has many seminar series that constitute a very stimulating source of new ideas and discussion. One of these series is especially conceived for post-graduate researchers. The STICERD offers the possibility of direct contacts with leading students of welfare systems and political economy. Moreover it has its own seminar series.
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Houghton street
WC2A 2AE London
United Kingdom

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