Dynamic Political Economy of Redistribution Policy: The Role of Education Costs

Ryo Arawatari () and Tetsuo Ono

No 07-31-Rev, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP)

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 high-tax equilibrium featured by the minority of highly educated individuals and a large size of the government, and the low-tax equilibrium featured by the majority of highly educated individuals and a small size of the government. For cases of low costs, there is a unique equilibrium featured by the majority of highly educated individuals and a large size of the government.

Keywords: Markov perfect equilibrium; Dynamic political economy; Redistribution policy; Education costs (search for similar items in EconPapers)
JEL-codes: D72 D78 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu and nep-pol
Date: 2007-08, Revised 2007-11
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Journal Article: Dynamic political economy of redistribution policy: the role of education costs (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:osk:wpaper:0731r

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