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Inequality Dynamics and the Politics of Redistribution

  • Tetsuo Ono


    (Graduate School of Economics, Osaka University)

This paper analyzes the political economy of public education and lump-sum transfer in an overlapping-generation model of a two-class society in which the dy- namics of inequality is driven by the accumulation of human capital. The two redistributive policies are determined by voting, while private education which sup- plements public education is purchased individually. The model, which includes two-dimensional voting, demonstrates the following two types of stable steady-state equilibria which are in line with the evidence: a high-inequality equilibrium with government spending in favor of public education, and a low-inequality equilibrium with government spending in favor of lump-sum transfer.

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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 12-09-Rev.

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Length: 37 pages
Date of creation: May 2012
Date of revision: Nov 2013
Handle: RePEc:osk:wpaper:1209r
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