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Income Inequality, Voting Over the Size of Public Consumption, and Growth

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  • Volker Grossmann

Abstract

According to a standard argument, higher income inequality fosters redistributive activities of the government in favor of the median income earner. This paper shows that if redistribution is achieved by a public provision of goods and services rather than by transfers, higher income inequality may imply a smaller size of the government in majority voting equilibrium. In addition to a static voting model, an endogenous growth model is analyzed to examine the role of saving decisions of heterogeneous individuals for both the distributional incidence of proportional factor income taxes and the voting outcome.

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  • Volker Grossmann, 2002. "Income Inequality, Voting Over the Size of Public Consumption, and Growth," CESifo Working Paper Series 731, CESifo.
    • Handle: RePEc:ces:ceswps:_731
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    Cited by:

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    2. Andros Kourtellos & Alex Lenkoski & Kyriakos Petrou, 2020. "Measuring the strength of the theories of government size," Empirical Economics, Springer, vol. 59(5), pages 2185-2222, November.
    3. Sigrid Roehrs & David Stadelmann, 2010. "Mobility and local income redistribution," Working Papers 2010/4, Institut d'Economia de Barcelona (IEB).
    4. Sigrid Roehrs & David Stadelmann, 2010. "Mobility and local income redistribution," Working Papers 2010/4, Institut d'Economia de Barcelona (IEB).
    5. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations : Evidence from the Belgian Firm's Data," Other publications TiSEM d78bf59a-e0ff-4451-86b9-1, Tilburg University, School of Economics and Management.
    6. Creedy, John & Moslehi, Solmaz, 2009. "Modelling the composition of government expenditure in democracies," European Journal of Political Economy, Elsevier, vol. 25(1), pages 42-55, March.
    7. Borissov, Kirill & Surkov, Alexander, 2010. "Endogenous growth in a model with heterogeneous agents and voting on public goods," MPRA Paper 27517, University Library of Munich, Germany.
    8. John Creedy & Shuyun May Li & Solmaz Moslehi, 2008. "The Composition of Government Expenditure in an Overlapping Generations Model," Department of Economics - Working Papers Series 1043, The University of Melbourne.
    9. Paetzel, Fabian & Lorenz, Jan & Tepe, Markus, 2018. "Transparency diminishes framing-effects in voting on redistribution: Some experimental evidence," European Journal of Political Economy, Elsevier, vol. 55(C), pages 169-184.
    10. Borissov, Kirill & Surkov, Alexander, 2010. "Endogenous growth in a model with heterogeneous agents and voting on public goods," MPRA Paper 27517, University Library of Munich, Germany.
    11. Thomas Leoni & Wolfgang Pollan, 2003. "The Impact of Inequality on Economic Growth," WIFO Working Papers 211, WIFO.
    12. Holger Strulik, 2007. "A distributional theory of government growth," Public Choice, Springer, vol. 132(3), pages 305-318, September.
    13. Margarita Katsimi & Thomas Moutos, 2004. "Monopoly, Inequality and Redistribution via the Public Provision of Private Goods," CESifo Working Paper Series 1318, CESifo.
    14. Andros Kourtellos & Alex Lenkoski & Kyriakos Petrou, 2017. "Measuring the Strength of the Theories of Government Size," University of Cyprus Working Papers in Economics 11-2017, University of Cyprus Department of Economics.
    15. Malakhov, Vladimir (Малахов, Владимир) & Simon, Mark (Симон, Марк), 2017. "Migration Policy in the Conditions of Economic Turbulence: The Experience of the European Union and the Prospects of Russia," Working Papers 051723, Russian Presidential Academy of National Economy and Public Administration.
    16. Sigrid Röhrs & David Stadelmann, 2014. "Homeownership, Mobility, And Local Income Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(4), pages 569-605, August.

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