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Inequality Dynamics and the Politics of Redistribution

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  • Tetsuo Ono

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    (Graduate School of Economics, Osaka University)

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    Abstract

    This paper analyzes the political economy of public education and lump-sum transfer in an overlapping-generation model of a two-class society in which the dy- namics of inequality is driven by the accumulation of human capital. The two redistributive policies are determined by voting, while private education which sup- plements public education is purchased individually. The model, which includes two-dimensional voting, demonstrates the following two types of stable steady-state equilibria which are in line with the evidence: a high-inequality equilibrium with government spending in favor of public education, and a low-inequality equilibrium with government spending in favor of lump-sum transfer.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1209R.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 12-09-Rev.

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    Length: 37 pages
    Date of creation: Oct 2013
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    Handle: RePEc:osk:wpaper:1209r

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: Public education; political economy; inequality;

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