Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents

Dmitry Veselov

HSE Working papers from National Research University Higher School of Economics

Abstract: We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of redistribution as well as for the level of entry barriers preventing the creation of more efficient firms. We show that under the majority voting rule there are three possible stable political outcomes: full redistribution, low redistribution and low barriers for entry (“liberal” order), high redistribution and high barriers for entry (“corporatism”). We show that key variables determining the political outcome are the expected gain from technological adoption, the ratio of total profits to total wages, and the skewness of human capital distribution.

Keywords: economic systems; political barriers for growth; majority voting; quality-ladders model; wealth inequality; talent inequality; economic growth (search for similar items in EconPapers)
JEL-codes: O33 P16 P48 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2013
New Economics Papers: this item is included in nep-cdm, nep-mac and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in WP BRP Series: Economics / EC, April 2013, pages 1-29

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Related works:
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:28/ec/2013

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