Dynamic political economy of redistribution policy: the role of education costs

Tetsuo Ono and Ryo Arawatari ()

Economics Bulletin, 2008, vol. 4, issue 13, pages 1-13

Abstract: This paper focuses on how education costs affect the political determination of redistribution policy via individual decision making on education. For cases of high costs, there are multiple equilibria: the poor-majority equilibrium featured by the minority of highly educated individuals and a high level of redistribution, and the rich-majority equilibrium featured by the majority of highly educated individuals and a low level of redistribution. For cases of low costs, there is a unique rich-majority equilibrium featured by the majority of highly educated individuals and a high level of redistribution.

Keywords: Markov perfect equilibrium; Dynamic political economy; Redistribution policy; Education costs (search for similar items in EconPapers)
JEL-codes: D7 H5 (search for similar items in EconPapers)
Date: 2008-05-29
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Working Paper: Dynamic Political Economy of Redistribution Policy: The Role of Education Costs (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:ebl:ecbull:v:4:y:2008:i:13:p:1-13

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