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Income inequality, voting over the size of public consumption, and growth

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  • Grossmann, Volker

Abstract

According to a standard argument, higher income inequality fosters redistributive activities of the government in favor of the median income earner. This paper shows that if redistribution is achieved by a public provision of goods and services rather than by transfers, higher income inequality may imply a smaller size of the government in majority voting equilibrium. In addition to a static voting model, an endogenous growth model is analyzed to examine the role of saving decisions of heterogeneous individuals for both the distributional incidence of proportional factor income taxes and the voting outcome.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 19 (2003)
Issue (Month): 2 (June)
Pages: 265-287

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Handle: RePEc:eee:poleco:v:19:y:2003:i:2:p:265-287

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Web page: http://www.elsevier.com/locate/inca/505544

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Cited by:
  1. John Creedy & Solmaz Moslehi, 2007. "Modelling the Composition of Government Expenditure in Democracies," Department of Economics - Working Papers Series 1007, The University of Melbourne.
  2. John Creedy & Shuyun May Li & Solmaz Moslehi, 2009. "The Composition of Government Expenditure in an Overlapping Generations Model," Department of Economics - Working Papers Series 1064, The University of Melbourne.
  3. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  4. Poutvaara, Panu, 2007. "The Expansion of Higher Education and Time-Consistent Taxation," IZA Discussion Papers 3023, Institute for the Study of Labor (IZA).
  5. Margarita Katsimi & Thomas Moutos, 2004. "Monopoly, Inequality and Redistribution via the Public Provision of Private Goods," CESifo Working Paper Series 1318, CESifo Group Munich.
  6. Borissov, Kirill & Surkov, Alexander, 2010. "Endogenous growth in a model with heterogeneous agents and voting on public goods," MPRA Paper 27517, University Library of Munich, Germany.
  7. Thomas Leoni & Wolfgang Pollan, 2003. "The Impact of Inequality on Economic Growth," WIFO Working Papers 211, WIFO.
  8. Holger Strulik, 2004. "A Distributional Theory of Government Growth," Discussion Papers 04-26, University of Copenhagen. Department of Economics.
  9. Sigrid Roehrs & David Stadelmann, 2010. "Mobility and local income redistribution," Working Papers 2010/4, Institut d'Economia de Barcelona (IEB).

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