Year: 1991
Type: report
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 llclassesfl (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.
DOI: 10.3386/w3668
Authors: Alberto Alesina, Dani Rodrik
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funder: Alfred P. Sloan Foundation
OpenAlex ID: W2147618847