Invest, expropriate, or wait? Expected income and the demand for redistribution

Philipp Harms and Stefan Zink

No 305, Discussion Papers, Series I from University of Konstanz, Department of Economics

Abstract: In this paper we offer an explanation why a poor majority does not necessarily expropriate a rich minority. We present a dynamic model in which individuals are willing to accept an unequal distribution of income in the current period if they are sufficiently optimistic about their future economic prospects. In this case, the fact that a policy of radical redistribution inflicts a persistent damage on the economy and thus reduces agents' future earning possibilities prevents the poor from expropriating the rich. Unlike previous contributions, we do not assume exogenous changes of the income distribution, but relate such changes to agents' rational investment decisions.

Keywords: political economy; inequality; redistribution of income (search for similar items in EconPapers)
JEL-codes: D31 D72 P16 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp1:305

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