Distributive Politics and Economic Growth

Alesina, Alberto; Rodrik, Dani

doi:10.3386/w3668

Cited by 460 publications

(495 citation statements)

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“…Thus there would be a tradeoff between slower growth today in exchange for more rapid growth in the future. This 21 Alesina and Rodrik (1990) study how a social planner with redistributive objectives chooses among redistribution and public investment in a model related to ours.…”

Section: Possible Extensionsmentioning

confidence: 99%

Is Inequality Harmful for Growth? Theory and Evidence

Persson¹,

Tabellini²

1991

1,198

1,499

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Is inequality harmful for growth? We sujgest that it is.To summarize our main argument: in a society where distributional conflict is more important, political decisions are more likely to produce economic policies that allow private individuals to appropriate less of the returns to growth promoting activities, such as accumulation of capital and productive knowledge. In the paper we first formulate a theoretical model that formally captures this idea. The model has a politico-economic equilibrium, which determines a sequence of growth rates depending on structural parameters, political institutions, and initial conditions. We then confront the testable empirical implications with two sets of data. A first data set pools historical evidence-which goes back to the mid 19th century-from the US and eight European countries. A second data set contains post-war evidence from a broad cross-section of developed and less developed countries. In both samples we find a statistically significant and quantitatively important negative relation between inequality and growth. After a comprehensive sensitivity analysis, we conclude that our findings are not distorted by measurement error, reverse causation, hetroskedasticity, or other econometric problems.

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Section: Possible Extensionsmentioning

confidence: 99%

Is Inequality Harmful for Growth? Theory and Evidence

Persson¹,

Tabellini²

1991

1,198

1,499

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show abstract

“…In the fiscal policy approach of Alesina and Rodrik (1994), Bertola (1993), Perotti (1993), Persson and Tabellini (1994), and many others, income distribution affects growth via its effects on government expenditure and taxation. For the sake of brevity, consider a highly stylized framework where fiscal policy is decided by majority voting, taxation is proportional to income, and tax revenues are redistributed lump-sum to all individuals.…”

Section: Endogenous Fiscal Policymentioning

confidence: 99%

“…The two schooling variables proxy for the stock of human capital at the beginning of the estimation period. Previous empirical studies of income distribution and growth (like Alesina and Perotti, 1995;Alesina and Rodrik, 1994;Persson and Tabellini, 1994;Clarke, 1993;Perotti, 1994b) used the primary and, in some cases, the secondary school enrollment ratios as proxies for the stock of human capital. The problems in interpreting these variables, which have the dimension of a flow, as proxies for stock, are well known (see, for example, the discussion in Barro, 1991).…”

Section: Basic Reduced-form Regressionsmentioning

confidence: 99%

Growth, income distribution, and democracy: What the data say

1996

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This paper investigates the relationship between income distribution, democratic institutions, and growth. It does so by addressing three main issues: the properties and reliability of the income distribution data, the robustness of the reduced form relationships between income distribution and growth estimated so far, and the specific channels through which income distribution affects growth. The main conclusion in this regard is that there is strong empirical support for two types of explanations, linking income distribution to sociopolitical instability and to the education/fertility decision. A third channel, based on the interplay of borrowing constraints and investment in human capital, also seems to receive some support by the data, although it is probably the hardest to test with the existing data. By contrast, there appears to be less empirical support for explanations based on the effects of income distribution on fiscal policy.

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“…Most research in this area focuses on the consequences of the absolute level and dynamics of income inequality. Many scholars have attempted to explain the impact of the income distribution on economic processes through a variety of channels, including human capital (Galor, 2011a); political processes (Alesina and Rodrik, 1994;Acemoglu, 2003;Rajan and Zingales, 2006); incentives for working hard (Bell and Freeman, 2001; Kuhn and Lozano, 2008); physical capital accumulation (Kaldor, 1955), social capital (Alesina and Perotti, 1996;Uslaner and Brown, 2005;McKnight and Nolan, 2012), and most recently through financial stability channels (Fitoussi and Saraceno, 2010; Ranciere and Kumhof, 2010; Stiglitz, 2012;Tomkiewicz, 2012).…”

Section: Introductionmentioning

confidence: 99%

Does income inequality hamper human capital accumulation in OECD countries?

Barták¹

2017

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Distributive Politics and Economic Growth

Cited by 460 publications

References 0 publications

Is Inequality Harmful for Growth? Theory and Evidence

Is Inequality Harmful for Growth? Theory and Evidence

Growth, income distribution, and democracy: What the data say

Does income inequality hamper human capital accumulation in OECD countries?

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