Fiscal federalism and redistributive politics

We consider the interaction between redistributive politics at central and local levels in a federal system, and characterize the factors influencing success in redistributive politics in both federal and unitary systems. We examine how the political characteristics of different states and groups give them better or worse outcomes in a federal system as opposed to a unitary system. We examine possibilities of multiple equilibria with divided government between the two layers. We analyze the choice between block grants and matching grants. We also examine the impact of federalism on the incentives for geographic mobility. (C) 1998 Elsevier Science S.A.