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Voting over redistribution in the Meltzer–Richard model under interdependent labor inputs

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  • Lopez-Velasco, Armando R.

Abstract

This paper extends the median voter result of Meltzer and Richard (1981) to the case where a labor economy has any constant returns to scale production function under quasilinear preferences with constant wage elasticity. Average productivities of the different labor inputs depend on their relative abundance in the economy. Agents are heterogeneous due to their labor type and (given type) due to their relative efficiency. They vote over income tax rates which in turn dictate the level of redistribution. The paper shows that preferences over tax rates are single-peaked and hence the median voter theorem applies. This framework connects the scarcity of inputs to the most preferred tax rates.

Suggested Citation

  • Lopez-Velasco, Armando R., 2020. "Voting over redistribution in the Meltzer–Richard model under interdependent labor inputs," Economics Letters, Elsevier, vol. 192(C).
    • Handle: RePEc:eee:ecolet:v:192:y:2020:i:c:s0165176520301518
    DOI: 10.1016/j.econlet.2020.109206
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    References listed on IDEAS

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    1. Facundo Piguillem & Anderson Schneider, 2013. "Heterogeneous Labor Skills, The Median Voter and Labor Taxes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 332-349, April.
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    Cited by:

    1. Lopez-Velasco, Armando R., 2024. "Neoclassical production, scarcity of skills and Pareto distributions," Economics Letters, Elsevier, vol. 234(C).

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    More about this item

    Keywords

    Meltzer–Richard; Median voter; Interdependent labor; Redistribution;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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