Wealth Inequality, Income Redistribution and Growth in 15 OECD countries
AbstractWe model the individuals' investment in physical capital and education decisions in presence of borrowing constraints and a progressive taxation system. Our empirical evidence for 15 OECD countries supports the theoretical model predictions according to which the effects on growth of higher redistribution are ambiguous. We find that in those countries characterized by a high (low) taxation level and a high (low) degree of tax progressivity, further redistribution has a negative (positive) impact on growth since the disincentive effects on individuals' effort prevail (is dominated by) the positive effect of allowing more people to have access to the capital market.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 190.
Date of creation: 04 Jun 2003
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growth; income distribution; progressive taxation;
Find related papers by JEL classification:
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
- NEP-DEV-2003-06-16 (Development)
- NEP-EEC-2003-06-16 (European Economics)
- NEP-LAB-2003-06-16 (Labour Economics)
- NEP-PBE-2003-06-16 (Public Economics)
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- N. Gobbin & G. Rayp, 2004.
"Inequality and Growth: Does Time Change Anything?,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
04/230, Ghent University, Faculty of Economics and Business Administration.
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