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Rent-Seeking, Capital Accumulation, and Macroeconomic Growth

Author

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  • Ben J. Heijdra

    (University of Groningen)

  • Pim Heijnen

    (University of Groningen)

Abstract

We study the effects of rent-seeking on economic growth. The starting point is an overlapping generations model where growth is driven by human capital accumulation. In this setting we introduce a source of rent, namely monopolization of one of the sectors of the economy, and agents who are heterogeneous in their (intrinsically useless) rent-seeking ability. Agents can boost their income either by investing in human capital or by capturing a fraction of rent. Monopolization increases the growth rate. The effect of rent-seeking on growth is ambiguous, but it increases wealth inequality.

Suggested Citation

  • Ben J. Heijdra & Pim Heijnen, 2025. "Rent-Seeking, Capital Accumulation, and Macroeconomic Growth," De Economist, Springer, vol. 173(3), pages 475-518, September.
    • Handle: RePEc:kap:decono:v:173:y:2025:i:3:d:10.1007_s10645-025-09456-8
    DOI: 10.1007/s10645-025-09456-8
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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