Cuff and Maurice Marchand study a combination of federalism and economics to determine what specific fiscal policies and intergovernmental transfers are required for federal economies that possess regional governments responsible for public services. According to their study, when labour is homogeneous, a wide variety of regional taxation policies can be utilized for purposes of redistribution so long as there is an optimal equalization scheme in place without concern for the cost of migration . On the other hand, if labour is heterogeneous, the costliness of inter-regional migration does have an effect on optimal policies. When migration is costless, "the set of instruments that can be used to decentralize the unitary state optimuum" is less broad, while when migration is costly, the central government must specifically introduce some incentive to encourage regional governmental redistribution of resources.
