Seminario 18/17: Ricardo Martínez (Universidad de Granada) THE PROBLEM OF DIVIDING A BUDGET AMONG SEVERAL DISTRICTS

Información

We study the problem of dividing a budget among the districts of a city taking into account their population and wealth. We focus on order preservation properties that ensure higher transfers to those districts with larger populations and, at the same time, introduce a policy redistribution so that districts with lower wealth per capita obtain higher transfers per capita. We determine the allocation methods that fulfills both requirements. We also study requirements on the stability and manipulability of the allocation. We find out that the proportional rule is the unique allocation method that meets the previous requirements. This proportional rule obviates the wealth component of the problem; however is reduces the inequality in the wealth per capita.