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Does income redistribution impede innovation?

Michał Brzeziński

Research Policy, 2022, vol. 51, issue 10

Abstract: Economic inequalities have increased in many countries since the 1980s, provoking calls for more income redistribution. One argument against increased redistribution is that it could hamper innovation and technological progress. To the best of our knowledge, this is the first paper that empirically investigates the relationship between government redistributive policies at the top of income distribution and innovative activity using new, high-quality, cross-country comparable panel data on income redistribution from the Distributional National Accounts. This study analyzes data from 34 advanced and emerging countries between 1980 and 2010. We find that redistribution has no negative impact on innovation in the cross-country setting. This result is robust to various measures of income redistribution and patent-based indicators of innovation, including patent counts, patent citations, and patent originality.

Keywords: Inequality; Top income shares; Distributional National Accounts (DINA); World Inequality Database; Redistribution; Innovation; Patent indicator; Panel data (search for similar items in EconPapers)
JEL-codes: D31 H31 I38 O30 O38 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:51:y:2022:i:10:s0048733322001263

DOI: 10.1016/j.respol.2022.104603

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