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Multiple politico-economic regimes, inequality and growth

  • Desdoigts, Alain
  • Moizeau, Fabien

In this paper, we abandon the stylized median voter and study (i) how distributional tensions can act in many different ways depending on social affinity and on the prospect of upward or downwardmobility of the different income classes, (ii) income distribution dynamics, intergenerational community formation and growth. In a world in which redistributive policies, whether fiscal or educational, affect how the entire economy breaks up into different communities, we find multiple politico-economic regimes that are supported by new international empirical evidence. In particular, we highlight a political economy decision mechanism through which the pressure for redistribution can be highly non linear therefore providing an explanation as to whymore inequality can be associated with less, rather than more, redistributive taxation. Our framework displays multiple steady states which depend on historical economic discrimination. We also provide sufficient conditions on the initial pattern of income distribution and local versus social spillovers ratio under which inequality and segregation persist in the long run.

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Paper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2001,65.

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Date of creation: 2001
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Handle: RePEc:zbw:sfb373:200165
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  1. Streufert, Peter, 2000. " The Effect of Underclass Social Isolation on Schooling Choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 461-82.
  2. Figini, P, 1999. "Inequality and Growth Revisited," Trinity Economics Papers 992, Trinity College Dublin, Department of Economics.
  3. Gordon Fisher & Michael McAleer, 1981. "Alternative Procedures and Associated Tests of Significance for Non-Nested Hypotheses," Working Papers 420, Queen's University, Department of Economics.
  4. BARHAM, Vicky & BOADWAY, Robin & MARCHAND, Maurice & PESTIEAU, Pierre, 1992. "Volunteer work and club size: Nash equilibrium and optimality," CORE Discussion Papers 1992040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
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