Political Activism and the Provision of Dynamic Incentives

Antoine Camous and Russell Cooper

No 26654, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the determination of income taxes in a dynamic setting with human capital accumulation. The goal is to understand the factors that support an outcome without complete redistribution, given a majority of relatively poor agents. In the analysis, the internal dynamics of income are not sufficient to prevent complete redistribution under majority rule without commitment. However, a political influence game limits the support for expropriatory taxation and preserves incentives. In some cases, the outcome of the game corresponds with the optimal allocation under commitment.

JEL-codes: D72 D74 E62 H31 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-cdm, nep-dge, nep-mac and nep-pol
Note: EFG
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