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

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  • Dmitry Veselov

    (National Research University Higher School of Economics, 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, low redistribution and low barriers for entry (“liberal” order), high redistribution and high barriers for 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 Veselov, 2013. "Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents," HSE Working papers WP BRP 28/EC/2013, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:28/ec/2013
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    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.

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    More about this item

    Keywords

    economic systems; political barriers for growth; majority voting; quality-ladders model; wealth inequality; talent inequality; economic growth;
    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

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