Income distribution, redistributive politics, and economic growth

Woojin Lee, John E. Roemer

Research output: Contribution to journalArticle

32 Citations (Scopus)

Abstract

This article studies the political economy of inequality and growth by combining the political economy approach with an imperfect capital market assumption. In the present model, there emerges a class of individuals whose members do not invest privately beyond the state-financed schooling, due to their initial wealth constraint. We show that inequality affects private investment not only through the political effect, which relates inequality to private investment negatively, but also through what we call the threshold effect, which associates inequality to private investment positively. In general, private investment and inequality do not show a monotone negative relationship.

Original languageEnglish
Pages (from-to)217-240
Number of pages24
JournalJournal of Economic Growth
Volume3
Issue number3
Publication statusPublished - 1998 Sep 1
Externally publishedYes

Keywords

  • Growth
  • Income distribution
  • Inequality
  • Political economy
  • Political effect
  • Threshold effect

ASJC Scopus subject areas

  • Economics and Econometrics

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