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Voting, Wealth Heterogeneity, and Endogenous Labor Supply

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Author Info
Chetan Ghate

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Abstract

We examine the link between voting outcomes, wealth heterogeneity, and endogenous labor - leisure choice in the majority-voting - endogenous-growth frameworks of Alesina and Rodrik (1994) and Das and Ghate (2004). We augment these frameworks to incorporate leisure-dependent utility and allow households to vote on factor-specific income taxes. When agents vote on factor-specific taxes, we show that the asymptotic convergence of factor holdings does not imply unanimity over the growth-maximizing tax policy in the steady state. Unanimity over growth-maximizing policies holds only when agents vote on a general income tax,and when agents vote on factor-specific taxes but labor is exogenous.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 63 (2007)
Issue (Month): 4 (December)
Pages: 477-497
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200712)63:4_477:vwhael_2.0.tx_2-3

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Related research
Keywords: factor income taxation; endogenous distribution; median-voter theorem; heterogeneous agents; endogenous labor supply;

Find related papers by JEL classification:
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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