Multiple politico-economic regimes, inequality and growth
AbstractIn this paper, we abandon the stylized median voter and study (i) how distributional tensions can act in many different ways depending on social affinity and on the prospect of upward or downwardmobility of the different income classes, (ii) income distribution dynamics, intergenerational community formation and growth. In a world in which redistributive policies, whether fiscal or educational, affect how the entire economy breaks up into different communities, we find multiple politico-economic regimes that are supported by new international empirical evidence. In particular, we highlight a political economy decision mechanism through which the pressure for redistribution can be highly non linear therefore providing an explanation as to whymore inequality can be associated with less, rather than more, redistributive taxation. Our framework displays multiple steady states which depend on historical economic discrimination. We also provide sufficient conditions on the initial pattern of income distribution and local versus social spillovers ratio under which inequality and segregation persist in the long run. --
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Bibliographic InfoPaper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2001,65.
Date of creation: 2001
Date of revision:
growth; Community formation; human capital; redistribution; social mobility;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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