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Does income redistribution impede innovation?

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  • Brzezinski, Michal

Abstract

Economic inequalities have increased in many countries since the 1980s, provoking calls for more income redistribution. One argument against increased redistribution is that it could hamper innovation and technological progress. To the best of our knowledge, this is the first paper that empirically investigates the relationship between government redistributive policies at the top of income distribution and innovative activity using new, high-quality, cross-country comparable panel data on income redistribution from the Distributional National Accounts. This study analyzes data from 34 advanced and emerging countries between 1980 and 2010. We find that redistribution has no negative impact on innovation in the cross-country setting. This result is robust to various measures of income redistribution and patent-based indicators of innovation, including patent counts, patent citations, and patent originality.

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  • Brzezinski, Michal, 2022. "Does income redistribution impede innovation?," Research Policy, Elsevier, vol. 51(10).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:10:s0048733322001263
    DOI: 10.1016/j.respol.2022.104603
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    More about this item

    Keywords

    Inequality; Top income shares; Distributional National Accounts (DINA); World Inequality Database; Redistribution; Innovation; Patent indicator; Panel data;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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