Distributive Politics and Economic Growth

Alberto Alesina and Dani Rodrik

No 3668, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the relationship between political conflict and economic growth in a simple model of endogenous growth with distributive conflicts. We study both the case of two "classes" (workers and capitalists) and the case of a continuum distribution of agents, characterized by different capital/labor shares. We establish several results concerning the relationship between the political influence of the two groups and the level of taxation, public investment, redistribution of income and growth. For example, it is shown that policies which maximize growth are optimal only for a government that cares only about the "capitalists." Also, we show that in a democracy (where the "median voter theorem' applies) the rate of taxation is higher and the rate of growth lower, the more unequal is the distribution of wealth We present empirical results consistent with these implications of the model.

Date: 1991-03
Note: EFG
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Published as Quarterly Journal of Economics, forthcomgin 1994

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Related works:
Journal Article: Distributive Politics and Economic Growth (1994)
Working Paper: Distributive Politics and Economic Growth (1994)
Working Paper: Distributive Politics and Economic Growth (1991)
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