Working Paper

Majority Voting in a Model of Means Testing

Abstract: We study a model of endogenous means testing where households differ in their income and where the in-kind transfer received by each household declines with income. Majority voting determines the two dimensions of public policy: the size of the welfare program and the means-testing rate. We establish the existence of a sequential majority voting equilibrium and show that the means-testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size. Furthermore, the set of subsidy recipients does not depend on households' preferences, but depends only on income heterogeneity.

Keywords: Sequential majority voting; Means testing; Political support; Targeting;

JEL Classification: D70; D72; H20;

https://doi.org/10.20955/wp.2018.014

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2019-06-01

Number: 2018-14

Pages: 32 pages

Related Works

• Working Paper Revision: Majority Voting in a Model of Means Testing