My Working Papers
In this paper I analyse the effects of social security policies on two
generations of workers exploiting the Single-mindedness theory, which assumes
that individuals are differently focused on work and leisure. Two vote-seeking
candidates run for election and have to choose the marginal tax rates on labour
for the two generations. I propose a redistributive scheme which is no longer
based on lump-sum transfers, as in the traditional literature, but on the more
realistic distortionary income taxation. In equilibrium a generation obtains a
positive transfer, entirely financed by the other generation which bear the
entire cost of the system. Furthermore, I demonstrate via numerical simulations
that the generation which has higher preference for leisure is more able to
capture candidates, obtain a net benefit which enables it to retire early.
Finally, I demonstrate a set of useful propositions which characterise
equilibria in probabilistic voting models with distortionary taxation: standoff
in political competition, convergence of policies, characteristics of internal
and endpoint equilibria when the value function is not strictly concave.
JEL Classification: D31, D72, H55
Keywords: Probabilistic Voting, Single-mindedness, Social
Security Stystems, Taxation
A Contribution to the Positive Theory of Direct
Taxation
In this paper I analyse a probabilistic voting model of direct taxation where
candidates set their policies in order to maximise the probability of winning
elections. Society is divided in groups who have different preferences for
consumption of leisure, that is they have different level of single-mindedness.
The use of a probabilistic voting model characterized by the presence
single-minded groups breaks down the classic result obtained under the median
voter theorem because it is no longer the position on the income scale which
drives the equilibrium policies but the ability of groups to focus on leisure,
instead. The robustness of the single-mindedness theory is demonstrated
allowing for heterogeneity of labour income. Finally, using data from Expenditure
and Food Survey, I demonstrate that direct taxation in the UK entails an uneven
distribution amonst individuals of different age.
JEL Classification: D31, D63, D78, H24, J22
Keywords: Probabilistic Voting Theory, Single-mindedness,
Direct Taxation, Income Distribution
Download the inter-generational inequality indexes for 27 countries (Appendix 1, 74 pages)
Download the result of regressions (Appendix 2, 12 pages)
A Contribution to the Positive Theory of Indirect
Taxation
In this paper I analyse a probabilistic voting model where self-interested
governments set their taxation policies in order to maximise the probability of
winning elections. Society is divided in groups who have different preferences
for consumption of goods, that is they have different level of
single-mindedness. Results show how candidates are completely captured by the
most powerful groups, which not necessarily represents the median voter, or the
middle class, but may be located at more extreme positions. The introduction of
a probabilistic voting model characterized by the presence of single-minded
groups totally overrules the classic result achieved by median voter models,
because it is no longer the position on the income scale which sets the
equilibrium policy but the ability of groups to focalise on their most preferred
issues, instead. This ability enables them to achieve a strong political power
which candidates cannot help going along with, because they would lose the
elections, otherwise.
JEL Classification: D11, H5, H53
Keywords: Probabilistic Voting Theory, Single-mindedness,
Indirect Taxation, Public Expenditure
In this paper I analyse a labour market where wages are determined according to
an Efficient Bargaining between a firm and a labour union, whose membership is
divided into two generations of workers: the old and the young. Unlike the
classical McDonald and Solow's model the bargaining is on hours of work,
instead of on the crew's size. I assume that generations have different tastes
for leisure and wages. I demonstrate that this conflict of interest between
generations may explain the old/young wage and hours of work gap. Empirical
evidence from WERS 2004 supports the validity of the theoretical model and
reject McDonald and Solow's setting, demonstrating that in British workplaces
negotiations take place on working hours and not on employment.
JEL Classification: D71, J22, J26, J51
Keywords: efficient bargaining models, labour unions,
probabilistic voting models, working hours
Do
political preferences depend on age? Evidence from British general elections
2005
In this paper I analyse the British Election Study 2005 in order to assess
whether the political preferences of voters depend on their age. In particular,
I evaluate whether political tendencies and judgements which voters make on the
Government and its policies differ amongst cohorts. Performing Ordered LOGIT
and PROBIT regressions I show that variable age, together with other
characteristics of individuals such as gender, education, religion, social and
economic conditions, is statistically significant, demonstrating that in the
United Kingdom political tastes differ between the young and the old.
Furthermore, Kernel Density estimations and the Kolmogorov-Smirnov test show
how distribution of preferences and judgments differ between the two groups of
voters.
Keywords: Voting, Political Preferences, Nonparametric
estimates
Download the slides of my seminar: The Social Calculus of Voting
The goal of this paper is to explore how the connection between political ideology and voters' preferences is able to generate different equilibria in a yardstick competition game, where good incumbents are forced to create a bad reputation or, in other words, to mimic the bad incumbents' behavior in order to win the elections in a two-candidate political competition.
Yardstick Competition in
Presence of Shocks: A Spatial Voting Model Approach
I analyse a yardstick competition game using a spatial voting model, where voters vote for a candidate according to the distance between their Ideal Point and the policy selected by a candidate. The policy which is closest to a voter's IP provides the voter with a higher utility so that minimizing the distance means maximising the utility. I demonstrate that in the presence of asymmetrical information the existence of yardstick competition entails a selection device but not a discipline device, suggesting the existence of a trade off between these two goals. In the second part, I analyse an economic environment characterised by the presence of shocks, whose sign and magnitude are a private information of incumbents. This time, the introduction of yardstick competition acts both as a selection and a discipline device.
A Theory of the
Allocation of Political Time with Externalities and Altruism (Draft)
In this paper I will introduce a micro-founded model of political activism. The aim is twofold: first of all, filling an existing gap with the actual literature which still lacks of a theoretical explanation about how voters choose their leisure activities in particular those related with Politics; secondly, explaining why the old may have an interest to spend a greater amount of their leisure in political activities than the young. Empirical evidence taken by the British Election Survey, confirm the hypothesis: political activism is related to age (although other individual characteristics, such as gender and education contribute to increase the explanatory power of regressions) and the old follow different activities in order to lobby politicians. Finally the paper represents an empirical proof for the Single Mindedness Theory of Social Security Systems, which states that since the old have a natural preference for leisure, they have to find a financial coverage for the reduction in labour income due to their decision to early retire or to reduce their labour supply.
Download figures Download Empirical Tables
A
contribution on the Positive Theory of the Public Debt (extremely prelimanary)
In this paper I will introduce a new political economy model, where there exists a competition amongst two political candidates, which aim to set a policy which enables them to win elections, maximising the probability of winning. I will show that, if taxes necessary to repay the debt are not lump sum but proportional to income, we have dramatic distorting effect on the labour supply. The problems is exacerbate once we take into account that the Government set taxes in order to favour the most influencing social group. As a consequence, effective marginal tax rates are differentiated amongst social groups and thus the burden of public debt is not equally borne.
Towards
a Positive Theory of Labour Market Imperfections: The role of preferences
(forthcoming)
