A Measure of Interregional Redistribution
Abstract
This paper develops a disaggregated index of interregional distribution generated by federal fiscal activity based on a comparison between relative federal revenues and expenditures assigned to various regions and the pattern of income disparities among regions. To explore the properties of this index, we present three special cases under known degrees of distribution and calculate the indices using the Canadian data for 1996. The local indices are then aggregated to derive a global index qf interregional redistribution. Our results show that the federal fiscal system in 1996 delivered a degree of interregional redistribution 1.8 times what would have been generated under equal per capital expenditures by region and nearly half of the redistribution that equalizes the per capita income via federal expenditures.