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Democratic governments, economic growth and income distribution

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  • SALMON, Pierre

    (LATEC - CNRS URA 342 - Université de Bourgogne)

Abstract

That in democracies more inequality leads to more redistribution is an implication of Allan Meltzer and Scott Richard's well-known model ( 1981).1 That, in turn, more redistribution leads to less growth is a generally accepted proposition. That "inequality is harmful for growth" (Persson and Tabellini, 1994) is thus the predictable result of the introduction of policy-making à la Meltzer and Richard into the theory of growth. The small literature in which such introduction has been attempted includes contributions by Alberto Alesina, Giuseppe Bertola, Roberto Perotti, Thomsten Persson, Dani Rodrik, Gilles Saint- Paul, Guido Tabellini and Thierry Verdier. Short surveys are provided by Perotti (1992), Persson and Tabellini (1992b) and Verdier (1994). The proposition that inequality of income or wealth, measured at one point of time, has a negative influence on subsequent growth is derived by all these authors with the exception of Saint-Paul and Verdier (1993), and some empirical support for it is displayed in Alesina and Rodrik (1992, 1994) and in Persson and Tabellini (1992a, 1994).
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Suggested Citation

  • SALMON, Pierre, 1995. "Democratic governments, economic growth and income distribution," LATEC - Document de travail - Economie (1991-2003) 1995-11, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    • Handle: RePEc:lat:lateco:1995-11
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    References listed on IDEAS

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    1. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-1198, December.
    2. Verdier, Thierry, 1994. "Models of political economy of growth: A short survey," European Economic Review, Elsevier, vol. 38(3-4), pages 757-763, April.
    3. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December.
    4. Winer, S.L. & Rutherford, T., 1991. "Coercive Redistribution and Franchise : A Preliminary Investigation Using Computable General Equilibrium Modelling," Papers 5, Carleton - School of Public Administration.
    5. Summers, Robert & Heston, Alan, 1984. "Improved International Comparisons of Real Product and Its Composition: 1950-1980," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(2), pages 207-262, June.
    6. SALMON, Pierre, 1991. "Unpopular Policies and the Theory of Representative Democracy," LATEC - Document de travail - Economie (1991-2003) 1991-02, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    7. Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 3(2), pages 24-43, Summer.
    8. Robert Summers & Alan Heston, 1984. "Improved International Comparisons Of Real Product And Its Composition: 1950–1980," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(2), pages 207-219, June.
    9. Perotti, Roberto, 1992. "Income Distribution, Politics, and Growth," American Economic Review, American Economic Association, vol. 82(2), pages 311-316, May.
    10. Pierre Salmon, 1991. "Checks and balances and international openness," Post-Print hal-00445591, HAL.
    11. Bornier Jean Magnan de & Norpoth H. & Lewis-Beck M.S. & Lafay J.D., 1991. "Economics and Politics The calculus of support," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 2(4), pages 1-3, December.
    12. Albert Breton & Gianluigi Galeotti & Pierre Salmon & Ronald Wintrobe, 1993. "Preferences and Democracy," Post-Print hal-00445588, HAL.
    13. Dowrick, Steve & Nguyen, Duc-Tho, 1989. "OECD Comparative Economic Growth 1950-85: Catch-Up and Convergence," American Economic Review, American Economic Association, vol. 79(5), pages 1010-1030, December.
    14. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    15. Sala-i-Martin, Xavier, 1994. "Cross-sectional regressions and the empirics of economic growth," European Economic Review, Elsevier, vol. 38(3-4), pages 739-747, April.
    16. Albert Breton & Galeotti Gianluigi & Pierre Salmon & Ronald Wintrobe, 1991. "The Competitive State," Post-Print hal-00445590, HAL.
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    Cited by:

    1. Pierre Salmon, 2003. "Assigning powers in the European Union in the light of yardstick competition among governments," Post-Print hal-00445603, HAL.
    2. Pierre Salmon, 2014. "How significant is yardstick competition among governments? Three reasons to dig deeper," Chapters, in: Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), A Handbook of Alternative Theories of Public Economics, chapter 14, pages 323-341, Edward Elgar Publishing.
    3. Enrico Colombatto, 2002. "Towards a quasi-Lamarckian theory of institutional change," ICER Working Papers 26-2002, ICER - International Centre for Economic Research.

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