Endogenous distribution, politics and the growth-equity tradeoff
In comparison to the standard literature on inequality and growth which assumes the former to be exogenous, we formulate a model in which inequality and growth are both endogenous. Furthermore, long-run distribution, at least locally, is shown to be independent of the initial distribution of factor ownership. It is shown that exogenous policy changes that are primarily targeted towards growth and foster less inequality do enhance growth. But those that are primarily redistributive and imply more equal distribution reduce growth. This is consistent with recent empirical work which shows that inequality and growth may be positively related.
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| Length: | 35 pages |
| Date of creation: | Sep 2003 |
| Date of revision: | |
| Handle: | RePEc:ind:isipdp:03-06 |
| Contact details of provider: | Postal: 7, S. J. S. Sansanwal Marg, New Delhi - 110016 Phone: 91-11-6564789 Fax: 91-11-6856779 Web page: http://www.isid.ac.in/~pu/ More information through EDIRC
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References listed on IDEAS
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199913, Rutgers University, Department of Economics.
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- Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
- Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
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