THE MEASUREMENT OF INTERREGIONAL REDISTRIBUTION

This paper develops two indices, both local and global, to measure interregional redistribution. The local indices proposed involve a comparison between federal revenues and expenditures assigned to various regions and the pattern of income disparities among regions. They are developed by relating these comparisons under a given regional distribution of federal fiscal activity to three special cases under known degrees of redistribution, namely, (a) no redistribution, and (b) the degree of redistribution that would be delivered solely through equal per capita federal spending in each region, and (c) the maximum degree of redistribution that would equalize per capita income in all regions. Global indices are then developed as weighted averages of the local indices. A major benefit of the proposed indices is the direct measurement of how much interregional redistribution is generated by the federal fisc compared to these known degrees of redistribution. We calculate the proposed indices using Canadian data for 1996. 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 capita federal expenditures in each region and nearly half of the maximum redistribution that could have been delivered by the federal fisc