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Distributive Politics and Economic Growth

Alberto Alesina and Dani Rodrik
The Quarterly Journal of Economics
Vol. 109, No. 2 (May, 1994), pp. 465-490
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/2118470
Page Count: 26
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Distributive Politics and Economic Growth
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Abstract

We study the relationship between politics and economic growth in a simple model of endogenous growth with distributive conflict among agents endowed with varying capital/labor shares. We establish several results regarding the factor ownership of the median individual and the level of taxation, redistribution, and growth. Policies that maximize growth are optimal only for a government that cares solely about pure "capitalists." The greater the inequality of wealth and income, the higher the rate of taxation, and the lower growth. We present empirical results that show that inequality in land and income ownership is negatively correlated with subsequent economic growth.

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