Inefficient Redistribution

Daron Acemoglu and James Robinson

No 2122, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: There are many well developed theories which explain why governments redistribute income. There are very few theories, however, which can explain why this redistribution often takes an inefficient form. In this paper we develop a theory of why redistribution is made inefficiently. Inefficient redistribution makes staying in or entering a group relatively more attractive than efficient methods of redistribution. The form of redistribution is therefore a tool to sustain political power in situations where; (1) the political influence of a group depends on its size, and (2) political institutions cannot credibly commit to future policy. We argue that the mechanism we propose may account for the choice of inefficient redistritive policies in agriculture, trade and the labor market.

Keywords: Democracy; Efficiency; Redistribution (search for similar items in EconPapers)
JEL-codes: D72 H21 J38 (search for similar items in EconPapers)
Date: 1999-04
References: Add references at CitEc
Citations: View citations in EconPapers (29)

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Journal Article: Inefficient Redistribution (2001)
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