IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-00830027.html
   My bibliography  Save this paper

Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents

Author

Listed:
  • Dmitry A. Veselov

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, HSE - Vysšaja škola èkonomiki = National Research University Higher School of Economics [Moscow], Laboratory of Macroeconomic Analysis)

Abstract

We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of redistribution as well as for the level of entry barriers preventing the creation of more efficient firms. We show that under the majority voting rule there are three possible stable political outcomes: full redistribution and low barriers to entry ("liberal" order), high redistribution and high barriers to entry ("corporatism"). We show that key variables determining the political outcome are the expected gain from technological adoption, the ratio of total profits to total wages, and the skewness of human capital distribution.

Suggested Citation

  • Dmitry A. Veselov, 2013. "Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents," Post-Print halshs-00830027, HAL.
    • Handle: RePEc:hal:journl:halshs-00830027
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00830027
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-00830027/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard D. McKelvey & Richard E. Wendell, 1976. "Voting Equilibria in Multidimensional Choice Spaces," Mathematics of Operations Research, INFORMS, vol. 1(2), pages 144-158, May.
    2. Daron Acemoglu, 2008. "Oligarchic Versus Democratic Societies," Journal of the European Economic Association, MIT Press, vol. 6(1), pages 1-44, March.
    3. Howitt, Peter & Mayer-Foulkes, David, 2005. "R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 147-177, February.
    4. Gilat Levy, 2005. "The Politics of Public Provision of Education," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1507-1534.
    5. Alberto Bucci, 2011. "Product-Variety, Population, Competition, and Growth," DEGIT Conference Papers c016_006, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Per Krusell & José-Víctor Ríos-Rull, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 301-329.
    7. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
    8. Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2007. "Democracy, Technology, and Growth," NBER Working Papers 13180, National Bureau of Economic Research, Inc.
    9. Cecilia García-Peñalosa & Jean-François Wen, 2008. "Redistribution and entrepreneurship with Schumpeterian growth," Journal of Economic Growth, Springer, vol. 13(1), pages 57-80, March.
    10. Oded Galor & Omer Moav & Dietrich Vollrath, 2009. "Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 143-179.
    11. Acemoglu, Daron & Robinson, James A., 2006. "Economic Backwardness in Political Perspective," American Political Science Review, Cambridge University Press, vol. 100(1), pages 115-131, February.
    12. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    13. Stephen L. Parente & Rui Zhao, 2006. "Slow Development And Special Interests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 991-1011, August.
    14. Веселов Дмитрий Александрович, 2012. "Социальный Оптимум И Политическое Равновесие В Экономике С Двумя Инструментами Перераспределения," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 16(3), pages 341-366.
    15. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    16. Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(2), pages 249-262.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dmitry A. Veselov, 2015. "Democratization and Barriers to Entry in a Two-Dimensional Voting Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01158139, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dmitry A. Veselov, 2015. "Democratization and Barriers to Entry in a Two-Dimensional Voting Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01158139, HAL.
    2. David Cuberes & Michał Jerzmanowski, 2009. "Democracy, Diversification and Growth Reversals," Economic Journal, Royal Economic Society, vol. 119(540), pages 1270-1302, October.
    3. Seim, Anna Larsson & Parente, Stephen L., 2013. "Democracy as a middle ground: A unified theory of development and political regimes," European Economic Review, Elsevier, vol. 64(C), pages 35-56.
    4. Kimura, Masako & Yasui, Daishin, 2009. "Public provision of private child goods," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 741-751, June.
    5. Solstad, Sondre Ulvund, 2023. "Political competition in dynamic economies," European Journal of Political Economy, Elsevier, vol. 80(C).
    6. Klaus Desmet & Avner Greif & Stephen L. Parente, 2020. "Spatial competition, innovation and institutions: the Industrial Revolution and the Great Divergence," Journal of Economic Growth, Springer, vol. 25(1), pages 1-35, March.
    7. Alexandra Pripadcheva & Dmitriy Veselov, 2021. "Social Mobility And Preferences For Open Access Societies," HSE Working papers WP BRP 250/EC/2021, National Research University Higher School of Economics.
    8. Bernasconi, Michele & Profeta, Paola, 2012. "Public education and redistribution when talents are mismatched," European Economic Review, Elsevier, vol. 56(1), pages 84-96.
    9. Uwe Dulleck & Paul Frijters, 2004. "Why the US and not Brazil? Old Elites and the Development of a Modern Economy," Vienna Economics Papers vie0408, University of Vienna, Department of Economics.
    10. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
    11. Parente, Stephen L. & Prescott, Edward C., 2005. "A Unified Theory of the Evolution of International Income Levels," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 21, pages 1371-1416, Elsevier.
    12. Chu, Angus C. & Peretto, Pietro F., 2023. "Innovation and inequality from stagnation to growth," European Economic Review, Elsevier, vol. 160(C).
    13. Debasis Bandyopadhyay & Xueli Tang, 2011. "Parental nurturing and adverse effects of redistribution," Journal of Economic Growth, Springer, vol. 16(1), pages 71-98, March.
    14. Oded Galor & Omer Moav & Dietrich Vollrath, 2009. "Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 143-179.
    15. Manuel Oechslin, 2009. "Creditor protection and the dynamics of the distribution in oligarchic societies," Journal of Economic Growth, Springer, vol. 14(4), pages 313-344, December.
    16. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    17. Roland Bénabou & Davide Ticchi & Andrea Vindigni, 2022. "Forbidden Fruits: The Political Economy of Science, Religion, and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(4), pages 1785-1832.
    18. Lorenzo Burlon, 2017. "Public expenditure distribution, voting, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(4), pages 789-810, August.
    19. Veselov, D., 2017. "Theory of Economic Growth: New Methods and Opportunities," Journal of the New Economic Association, New Economic Association, vol. 34(2), pages 176-181.
    20. Emanuele Felice & Michelangelo Vasta, 2015. "Passive modernization? The new human development index and its components in Italy's regions (1871–2007)," European Review of Economic History, European Historical Economics Society, vol. 19(1), pages 44-66.

    More about this item

    Keywords

    Barriers to entry; majority voting; quality-ladders model; wealth inequality; talent inequality; economic growth; Barrières d'entrées; la règle majoritaire; le modèle d'échelles de la qualité; l'inégalité de la richesse; l'inégalité du talent;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00830027. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.