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Redistributive taxation, wealth distribution, and economic growth

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  • Toshiki Tamai

Abstract

This paper examines the relationship between wealth distribution and economic growth in an endogenous growth model with heterogeneous households and redistributive taxation. In this paper, we incorporate an endogenous determination of redistributive policy into the model, focusing on the relation between pre- and post-tax inequality. Endogenous redistributive policy affects wealth distribution and economic growth. Therefore, the relation between post-tax inequality and economic growth is different from that between pre-tax inequality and economic growth. Results show that there exists a negative correlation between pre-tax inequality and economic growth, whereas there exists an inverted-U relationship between post-tax inequality and economic growth in a voting equilibrium. Copyright Springer-Verlag Wien 2015

Suggested Citation

  • Toshiki Tamai, 2015. "Redistributive taxation, wealth distribution, and economic growth," Journal of Economics, Springer, vol. 115(2), pages 133-152, June.
    • Handle: RePEc:kap:jeczfn:v:115:y:2015:i:2:p:133-152
    DOI: 10.1007/s00712-014-0424-2
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    2. Keishun Suzuki, 2020. "Mobility, Inequality, and Growth: An Inverted-U Relationship," Economics Bulletin, AccessEcon, vol. 40(3), pages 2047-2057.

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    More about this item

    Keywords

    Redistributive tax; Inequality; Economic growth; O11; O15; H23;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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