Inequality, democracy, institutional quality, and fiscal redistribution

Arbeitspapier

This paper studies the joint effect of economic and political inequalities on redistributive taxation and institutional quality. The theoretical model suggests that income inequality, coupled with political bias in favor of the rich, decreases redistribution and lowers institutional quality. The effect of the former is to increase productive investment, and the effect of the latter is to decrease it - with resulting ambiguous implications for economic growth. Testing these predictions empirically in a panel of countries, the paper finds that inequality has a negative effect on both institutional quality and redistribution, especially in non-democratic countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 620

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Micro-Based Behavioral Economics: General‡ ; Fiscal Policy ; Structure, Scope, and Performance of Government ; Macroeconomic Analyses of Economic Development
• Subject: Inequality ; institutions ; redistribution ; Einkommensverteilung ; Soziale Ungleichheit ; Einkommensumverteilung ; Institutionelle Infrastruktur ; Theorie ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chong, Alberto ; Gradstein, Mark
• Event: Veröffentlichung
• (who): Inter-American Development Bank, Research Department
• (where): Washington, DC
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/51499
• Last update: 10.03.2025, 11:46 AM CET