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Rat Race, Redistribution, and Growth

Author

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  • Guido Cozzi

    (University of Rome La Sapienza)

Abstract

Introducing locally negatively interdependent preferences into a simple AK growth model easily explains the often observed insignificant or positive correlation between distortionary redistribution and growth rates. Positive capital income taxes and lump sum transfers are harmful for growth, but people rationally vote for them in order to reduce "rat race" overaccumulation. A "neutrality proposition" holds if the pivotal voter is the mean voter, as in a representative agent case, but it fails if the pivotal voter is poorer than the average citizens. (Copyright: Elsevier)

Suggested Citation

  • Guido Cozzi, 2004. "Rat Race, Redistribution, and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(4), pages 900-915, October.
    • Handle: RePEc:red:issued:v:7:y:2004:i:4:p:900-915
    DOI: 10.1016/j.red.2004.05.002
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    Cited by:

    1. Omer Moav and & Zvika Neeman, 2012. "Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital," Economic Journal, Royal Economic Society, vol. 122(563), pages 933-956, September.
    2. Boris Gershman, 2014. "The two sides of envy," Journal of Economic Growth, Springer, vol. 19(4), pages 407-438, December.
    3. Holger Strulik, 2015. "How Status Concerns Can Make Us Rich and Happy," Economica, London School of Economics and Political Science, vol. 82, pages 1217-1240, December.
    4. Fabian ten Kate & Petros Milionis, 2019. "Is capital taxation always harmful for economic growth?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 758-805, August.
    5. Petach, Luke & Tavani, Daniele, 2017. "Keeping up with the Joneses: Other-regarding Preferences and Endogenous Growth," EconStor Preprints 169416, ZBW - Leibniz Information Centre for Economics.
    6. Michael Mitsopoulos, 2009. "Envy, Institutions And Growth," Bulletin of Economic Research, Wiley Blackwell, vol. 61(3), pages 201-222, July.
    7. repec:bla:scotjp:v:56:y:2009:i:s1:p:474-491 is not listed on IDEAS
    8. Guido Cozzi & Silvia Galli, 2009. "Science‐Based R&D In Schumpeterian Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(4), pages 474-491, September.
    9. Petach, Luke A. & Tavani, Daniele, 2021. "Consumption externalities and growth: Theory and evidence for the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 976-997.

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