Why the Rich Should Like R&D Less
It is well known that research and development (R&D) is an important engine for economic growth. Also, initial wealth inequality and subsequent economic growth are well known to be related. This paper links inequality and R&D-driven growth. It shows that in a class of economies where R&D is the main engine for growth, different wealth groups differ in their desire for aggregate innovative efforts: the higher the profit share of the individual's incomes the lower their ideal aggregate R&D and innovation. If rich shareholders were able to pursue their common interest and to discourage too much R&D compared, then a pro-labour government able to impose distortionary progressive taxation, by minimizing the difference between the rich and the poor can maximize growth. Such predicted negative relationship between desired R&D and dynastic wealth is robust to any subsidy rate lower than 100%
|Date of creation:||Jun 2008|
|Date of revision:||Aug 2008|
|Contact details of provider:|| Postal: Adam Smith Building, Glasgow G12 8RT|
Phone: 0141 330 4618
Fax: 0141 330 4940
Web page: http://www.gla.ac.uk/schools/business/research/
More information through EDIRC
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.:
- Lutz G. Arnold, 2006. "The Dynamics of the Jones R&D Growth Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 143-152, January.
- Jones, Charles I., 2005.
"Growth and Ideas,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111
- Daron Acemoglu, 2007. "Introduction to Modern Economic Growth," Levine's Bibliography 122247000000001721, UCLA Department of Economics.
- Alberto Alesina & George-Marios Angeletos, 2004.
"Fairness and Redistribution,"
122247000000000283, UCLA Department of Economics.
- Alberto Alesina & George-Marios Angeletos, 2004. "Fairness and Redistribution," NajEcon Working Paper Reviews 122247000000000306, www.najecon.org.
- Angeletos, George-Marios & Alesina, Alberto, 2005. "Fairness and Redistribution," Scholarly Articles 4553009, Harvard University Department of Economics.
- Chou, Chien-Fu & Talmain, Gabriel, 1996. "Redistribution and Growth: Pareto Improvements," Journal of Economic Growth, Springer, vol. 1(4), pages 505-23, December.
- Jakob Madsen, 2008.
"Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data,"
Journal of Economic Growth,
Springer, vol. 13(1), pages 1-26, March.
- Jakob B. Madsen & EPRU & FRU, 2007. "Semi-Endogenous Versus Schumpeterian Growth Models: Testing The Knowledge Production Function Using International Data," Monash Economics Working Papers 26-07, Monash University, Department of Economics.
- Cozzi Guido & Spinesi Luca, 2004. "Information Transmission and the Bounds to Growth," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-17, March.
- Reto Foellmi & Josef Zweimuller, 2006.
"Income Distribution and Demand-Induced Innovations,"
Review of Economic Studies,
Oxford University Press, vol. 73(4), pages 941-960.
- Reto Foellmi & Josef Zweimï¿½ller, . "Income Distribution and Demand-induced Innovations," IEW - Working Papers 212, Institute for Empirical Research in Economics - University of Zurich.
- Foellmi, Reto & Zweimüller, Josef, 2005. "Income Distribution and Demand-Induced Innovations," CEPR Discussion Papers 4985, C.E.P.R. Discussion Papers.
- Guido Cozzi, 2003. "Innovating on Innovations," Rivista di Politica Economica, SIPI Spa, vol. 93(2), pages 3-29, March-Apr.
- Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
- Peretto, Pietro F, 1998.
"Technological Change and Population Growth,"
Journal of Economic Growth,
Springer, vol. 3(4), pages 283-311, December.
- Guido Cozzi, 2005. "A Note on Progressive Taxation and Cooperation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(5), pages 859-865, December.
- Cecilia García-Peñalosa & Jean-François Wen, 2008. "Redistribution and entrepreneurship with Schumpeterian growth," Journal of Economic Growth, Springer, vol. 13(1), pages 57-80, March.
- Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
- Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
When requesting a correction, please mention this item's handle: RePEc:gla:glaewp:2009_14. 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: (Jeanette Findlay)
If references are entirely missing, you can add them using this form.