Inequality and Political Consensus
This paper develops a model of political consensus in order to explain the missing link between inequality and political redistribution. Political consensu s is an implicit agreement not to vote for extreme policy proposals. We show tha t such an agreement may play an efficiency-enhancing role. Voters anticipate that voting for extremist parties increases policy uncertainty in the future. A pol itical consensus among voters reduces policy uncertainty because power-seeking p oliticians propose non-discriminatory policies in their own interest. We study h ow much inequality can be sustained in a democracy and how the limits to redistr ibution vary with initial inequality. We find that more inequality need not lead to more redistribution. The maximum amount of redistribution decreases with ine quality if (and only if) agents are sufficiently patient. In this case inequalit y is politically self-sustaining.
|Date of creation:||Feb 1999|
|Contact details of provider:|| Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany|
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grandmont, Jean-Michel, 1978. "Intermediate Preferences and the Majority Rule," Econometrica, Econometric Society, vol. 46(2), pages 317-330, March.
- Alberto Alesina & Dani Rodrik, 1994.
"Distributive Politics and Economic Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 109(2), pages 465-490.
- Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
- Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
- Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
- Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Social Choice: A Mean Voter Theorem," Econometrica, Econometric Society, vol. 59(1), pages 1-23, January.
- Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Social Choice: A Mean Voter Theorem," Cowles Foundation Discussion Papers 938, Cowles Foundation for Research in Economics, Yale University.
- Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
- Gordon Tullock, 1967. "The General Irrelevance of the General Impossibility Theorem," The Quarterly Journal of Economics, Oxford University Press, vol. 81(2), pages 256-270.
- Avinash Dixit & John Londregan, 1998. "Ideology, Tactics, and Efficiency in Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 497-529.
- Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
- Clarke, George R. G., 1995. "More evidence on income distribution and growth," Journal of Development Economics, Elsevier, vol. 47(2), pages 403-427, August.
- Clarke, George R. G., 1992. "More evidence on income distribution and growth," Policy Research Working Paper Series 1064, The World Bank.
- Benabou, R., 1996. "Unequal Societies," Working Papers 96-17, C.V. Starr Center for Applied Economics, New York University.
- Bénabou, Roland, 1996. "Unequal Societies," CEPR Discussion Papers 1419, C.E.P.R. Discussion Papers.
- Roland Benabou, 1996. "Unequal Societies," NBER Working Papers 5583, National Bureau of Economic Research, Inc.
- Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 265-286.
- Gene Grossman & Elhanan Helpman, 1994. "Electoral Competition and Special Interest Politics," NBER Working Papers 4877, National Bureau of Economic Research, Inc.
- Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February.
- Peter Coughlin, 1986. "Elections and income redistribution," Public Choice, Springer, vol. 50(1), pages 27-91, January.
- Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, vol. 4(2), pages 163-185, February. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:bon:bonsfa:591. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (BGSE Office)
If references are entirely missing, you can add them using this form.