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Dynamic Political Economy of Redistribution Policy: The Role of Education Costs

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  • Ryo Arawatari

    ()
    (Graduate School of Economics, Osaka University)

  • Tetsuo Ono

    ()
    (Graduate School of Economics, Osaka University)

Abstract

This paper focuses on how education costs affect the political determination of redistribution policy via individual decision-making on education. For cases of high costs, there are multiple equilibria: the high-tax equilibrium featured by the minority of highly educated individuals and a large size of the government, and the low-tax equilibrium featured by the majority of highly educated individuals and a small size of the government. For cases of low costs, there is a unique equilibrium featured by the majority of highly educated individuals and a large size of the government.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0731R.pdf
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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 07-31-Rev.

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Length: 33 pages
Date of creation: Aug 2007
Date of revision: Nov 2007
Handle: RePEc:osk:wpaper:0731r

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: Markov perfect equilibrium; Dynamic political economy; Redistribution policy; Education costs;

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  1. Hassler, John & Storesletten, Kjetil & Zilibotti, Fabrizio, 2003. "Democratic Public Good Provision," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4044, C.E.P.R. Discussion Papers.
  2. Markus Jäntti & Eva Österbacka & Oddbjörn Raaum & Tor Eriksson & Anders Björklund, 2002. "Brother correlations in earnings in Denmark, Finland, Norway and Sweden compared to the United States," Journal of Population Economics, Springer, Springer, vol. 15(4), pages 757-772.
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Cited by:
  1. Ryo Arawatari & Tetsuo Ono, 2008. "A Second Chance at Success: A Political Economy Perspective?," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 08-04, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  2. repec:ebl:ecbull:v:4:y:2008:i:13:p:1-13 is not listed on IDEAS
  3. Ryo Arawatari & Tetsuo Ono, 2009. "Inequality, Mobility and Redistributive Politics," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 09-12, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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