Redistributive taxation, wealth distribution, and economic growth

Toshiki Tamai

Journal of Economics, 2015, vol. 115, issue 2, 133-152

Abstract: This paper examines the relationship between wealth distribution and economic growth in an endogenous growth model with heterogeneous households and redistributive taxation. In this paper, we incorporate an endogenous determination of redistributive policy into the model, focusing on the relation between pre- and post-tax inequality. Endogenous redistributive policy affects wealth distribution and economic growth. Therefore, the relation between post-tax inequality and economic growth is different from that between pre-tax inequality and economic growth. Results show that there exists a negative correlation between pre-tax inequality and economic growth, whereas there exists an inverted-U relationship between post-tax inequality and economic growth in a voting equilibrium. Copyright Springer-Verlag Wien 2015

Keywords: Redistributive tax; Inequality; Economic growth; O11; O15; H23 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:115:y:2015:i:2:p:133-152

DOI: 10.1007/s00712-014-0424-2

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