Leviathan in a Dual Economy
This paper studies the policies of a Leviathan state with an ambition to make money and to stay in power. The economic framework is a developing country characterized by dual markets. Government revenue is raised by taxing the agricultural sector. Part of this revenue is offered to the politically influential urban population in the form of low productive, but well paid, public-sector employment. The author calculates the optimal level of rural taxation from the point of view of the Leviathan and investigates its effects on migration, industrialization, public-sector employment, and urban unemployment in different political scenarios. Copyright 1995 by Kluwer Academic Publishers
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