Voting, Wealth Heterogeneity, and Endogenous Labor Supply

Chetan Ghate

FinanzArchiv: Public Finance Analysis, 2007, vol. 63, issue 4, 477-497

Abstract: We examine the link between voting outcomes, wealth heterogeneity, and endogenous labor - leisure choice in the majority-voting - endogenous-growth frameworks of Alesina and Rodrik (1994) and Das and Ghate (2004). We augment these frameworks to incorporate leisure-dependent utility and allow households to vote on factor-specific income taxes. When agents vote on factor-specific taxes, we show that the asymptotic convergence of factor holdings does not imply unanimity over the growth-maximizing tax policy in the steady state. Unanimity over growth-maximizing policies holds only when agents vote on a general income tax,and when agents vote on factor-specific taxes but labor is exogenous.

Keywords: factor income taxation; endogenous distribution; median-voter theorem; heterogeneous agents; endogenous labor supply (search for similar items in EconPapers)
JEL-codes: E62 O40 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:sici:0015-2218(200712)63:4_477:vwhael_2.0.tx_2-3

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DOI: 10.1628/001522107X268989

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