Rent-Seeking, Capital Accumulation, and Macroeconomic Growth

Ben Heijdra and Pim Heijnen

De Economist, 2025, vol. 173, issue 3, No 3, 475-518

Abstract: Abstract We study the effects of rent-seeking on economic growth. The starting point is an overlapping generations model where growth is driven by human capital accumulation. In this setting we introduce a source of rent, namely monopolization of one of the sectors of the economy, and agents who are heterogeneous in their (intrinsically useless) rent-seeking ability. Agents can boost their income either by investing in human capital or by capturing a fraction of rent. Monopolization increases the growth rate. The effect of rent-seeking on growth is ambiguous, but it increases wealth inequality.

Keywords: Rent seeking; Economic growth; Capital accumulation; Monopolization; Wasteful competition (search for similar items in EconPapers)
JEL-codes: D72 E24 L12 O41 O43 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Rent Seeking, Capital Accumulation, and Macroeconomic Growth (2023)
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DOI: 10.1007/s10645-025-09456-8

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