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Inefficient Redistribution

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Author Info
Acemoglu, Daron
Robinson, James A

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Abstract

There are many well developed theories which explain why governments redistribute income. There are very few theories, however, which can explain why this redistribution often takes an inefficient form. In this paper we develop a theory of why redistribution is made inefficiently. Inefficient redistribution makes staying in or entering a group relatively more attractive than efficient methods of redistribution. The form of redistribution is therefore a tool to sustain political power in situations where; (1) the political influence of a group depends on its size, and (2) political institutions cannot credibly commit to future policy. We argue that the mechanism we propose may account for the choice of inefficient redistritive policies in agriculture, trade and the labor market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2122.

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Date of creation: Apr 1999
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Handle: RePEc:cpr:ceprdp:2122

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Related research
Keywords: Democracy; Efficiency; Redistribution;

Other versions of this item:

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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This page was last updated on 2009-10-29.

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