Fiscal transfers and distributive conflict in a simple endogenous growth model with unemployment
AbstractIn the simplified formal treatment proposed in this paper, a decrease in a policy parameter the ratio of total tax revenues to GDP can monotonically increase long-term growth rate and may lead to a higher employment level. This notwithstanding, the paper shows that the redistributive implications of such a decrease may induce the wage earners to oppose it. As a consequence, policy makers reflecting social preferences may undertake redistributive transfers generating persistent unemployment and lowering growth even if commitment technologies allowing them to follow pre-announced tax policies were feasible.
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Bibliographic InfoPaper provided by University of Bergamo, Department of Economics in its series Working Papers with number 0401.
Length: 20 pages
Date of creation: Aug 2004
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More information through EDIRC
endogenous growth; tax burden; welfare reforms; capital-labor conflict; politico-economic models;
Find related papers by JEL classification:
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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