Political rivalry effects on human capital accumulation and inequality: a New Political Economy approach

Elena Sochirca (), Oscar Afonso and Sandra Silva ()
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Elena Sochirca: FEP

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Abstract We propose an endogenous growth model with elements of new political economy in order to study the effects of political institutions and political rivalry on human capital accumulation and income inequality. Relating to the increasing literature on the relationship between income redistribution, inequality and growth, and on the political economy of growth, our model shows that (i) non-distortionary redistribution via public education equalizes income levels and increases human capital accumulation; (ii) political rivalry produces negative outcomes in all dimensions of the considered economic interactions. In particular, we find that occurring episodes of political rivalry reduce human capital accumulation through their negative impact on public investments in education, workers' wages and individual learning choice, and increase income inequality. As regards the role of political institutions, our analysis suggests that the elasticities of human capital accumulation with respect to public and private investments have crucial implications for public policies and require particular attention to the political rivalry effects.

Keywords: political rivalry; institutions; human capital accumulation; public education; inequality; efficient redistribution; economic growth. (search for similar items in EconPapers)
JEL-codes: E24 H21 H40 H52 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012-09
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Political Rivalry Effects on Human Capital Accumulation and Inequality: A New Political Economy Approach (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:466

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