Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/63586
Authors: 
Haile, Daniel T.
Year of Publication: 
2005
Series/Report no.: 
Research Paper, UNU-WIDER, United Nations University (UNU) 2005/21
Abstract: 
This paper presents a model allowing one to analyze the joint determination of inequality, taxes, human capital and growth. We consider the political economy of redistribution between three income groups in a dynamic economy. The paper seeks to explain the effect of corruptibility (exemptions) and lobby group size on policy outcomes. Theoretically, this paper provides a linkage between lobbying activities, wealth distribution and growth. By endogenizing the weights the social planner gives to their constituents, our analysis explains why the relationship between redistribution and inequality is non-monotonic. In particular, the theory predicts a non-monotonic relation between the level of education, taxation and growth. Our empirical results, moreover, confirm the conjectured effect that in economies with a higher degree of corruption and inequality, we observe a lower tax/GDP ratio, leading to a lower development of human capital and thus lower growth. – income ; redistribution ; corruption ; system of equations ; panel data
JEL: 
C23
D31
D92
H26
I22
O15
O41
ISBN: 
9291907006
Document Type: 
Working Paper

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