Income redistribution and public good provision in ha diverse society

Abstract

I analyze the post-electoral coalition formation process in a two dimensional political environment. The two dimensions are the degree of a proportional tax rate and the degree of a group-specific public good. Parties are office-motivated and care instrumentally about policy. I analyze when stable coalitions exist and obtain that for that to occur office benefits should exceed a certain level. I analyze how this critical level and the set of policies implemented are a¤ected by the income levels and the degree of diversity. For both office and policy-motivated parties the same result holds but the critical level might be lower.