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Distributive Politics and Economic Growth

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  • Alberto Alesina
  • Dani Rodrik

Abstract

We study the relationship between politics and economic growth in a simple model of endogenous growth with distributive conflict among agents endowed with varying capital/labor shares. We establish several results regarding the factor ownership of the median individual and the level of taxation, redistribution, and growth. Policies that maximize growth are optimal only for a government that cares solely about pure "capitalists." The greater the inequality of wealth and income, the higher the rate of taxation, and the lower growth. We present empirical results that show that inequality in land and income ownership is negatively correlated with subsequent economic growth.

Suggested Citation

  • Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    • Handle: RePEc:oup:qjecon:v:109:y:1994:i:2:p:465-490.
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    File URL: http://hdl.handle.net/10.2307/2118470
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