Skip to main content

Advertisement

Log in

Why does redistribution not shrink when equality is high?

  • Articles
  • Income Distribution
  • Published:
Intereconomics

Abstract

Studies on growth and distribution often claim that there is a positive relationship between the extent of inequality and the amount of redistribution. The following article presents empirical evidence for 15 high-income countries to show that even in economies with relatively high equality redistribution does not shrink, and offers a number of politico-economic explanations for this fact

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  1. For a survey of the multiple relations between inequality, redistribution and growth see Michael Groemling: Ist Ungleichheit der Preis für Wohlstand? Zum Verhältnis von Wachstum und Verteilung, Cologne 2001.

  2. Torsten Persson, Guido Tabellini: Is Inequality Harmful for Growth?, in: American Economic Review, Vol. 84, 1994, pp. 600–621.

  3. Alberto Alesina, Dani Rodrik: Distributive Politics and Economic Growth, in: Quarterly Journal of Economics, Vol. 109, 1994, pp. 465–490.

  4. Robert J. Barro: Government Spending in a Simple Model of Endogenous Growth, in: Journal of Political Economy, Vol. 98, 1990, pp. 103–125.

  5. Roberto Perotti: Political Equilibrium, Income Distribution, and Growth, in: Review of Economic Studies, Vol. 60, 1993, pp. 755–776.

  6. Oded Galor, Daniel Tsiddon: Human Capital Distribution, Technological Progress, and Economic Growth, CERP Discussion Paper, No. 971, London 1994.

  7. Robert Lucas: On the Mechanics of Economic Development, in: Journal of Monetary Economics, Vol. 22, 1988, pp. 3–42.

  8. Roberto Perotti, op. cit.; Political Equilibrium, Income Distribution, and Growth, in: Review of Economic Studies, Vol. 60, 1993, Gilles Saint-Paul, Thierry Verdier: Education, Democracy and Growth, in: Journal of Development Economics, Vol. 42, 1993, pp. 399–407.

  9. For a survey of that line of aroumertation see Michael Groemling, op. cit., Ist Ungleichheit der Preis für Wohlstand? Zum Verhältnis von Wachstum und Verteilung, Cologne 2001. pp. 173–182.

  10. For more details see Michael Groemling, op. cit., Ist Ungleichheit der Preis für Wohlstand? Zum Verhältnis von Wachstum und Verteilung, Cologne 2001. pp. 35–38.

  11. Vito Tanzi, Ludger Schuknecht: Reconsidering the Fiscal Role of Government: The International Perspective, in: American Economic Review, Papers and Proceedings, Vol. 87, 1997, pp. 164–168; Nicholas Crafts: Globalization and Growth in the Twentieth Century, IMF Working Paper, No. 44, Washington DC 2000.

  12. Vito Tanzi, Ludger Schuknecht, op. cit. Reconsidering the Fiscal Role of Government: The International Perspective, in: American Economic Review, Papers and Proceedings, Vol. 87, 1997, pp. 164–168; Nicholas Crafts: Globalization and Growth in the Twentieth Century, IMF Working Paper, No. 44, Washington DC 2000.

  13. Paul Atkinson, Paul van den Noord: Managing Public Expenditure: Some Emerging Policy Issues and a Framework for Analysis, OECD Economics Department Working Papers, No. 285, Paris 2001.

  14. Horst Zimmermann: Wohlfahrtsstaat zwischen Wachstum und Verteilung: Zu einem grundlegenden Konflikt in Hocheinkommensländern, Munich 1996.

  15. Assar Lindbeck: Redistribution Policy and the Expansion of the Public Sector, in: Journal of Public Economics, Vol. 28, 1985, pp. 309–328; Assar Lindbeck: How can Economic Policy Strike a Balance Between Economic Efficiency and Income Equality, in: Federal Reserve Bank of Kansas City (ed.): Income Equality: Issues & Policy Options, Kansas City 1998, pp. 295–336.

  16. Jean Cartier-Bresson: Economics of Corruption, in: OECD Observer, No. 220, 2000, pp. 25–27.

  17. Frank Knight: Institutions and Social Conflict, Cambridge 1992.

  18. Lorenzo Kristov, Peter Lindert, Robert McClelland: Pressure groups and redistribution, in: Journal of Public Economics, Vol. 48, 1992, pp. 135–163.

  19. Gilles Saint-Paul: Understanding Labour Market Institutions, in: World Economics, Vol. 1, 2000, No. 2, pp. 73–87.

  20. Mancur Olson: The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities, New Haven 1982; Denis Mueller: The Political Economy of Growth and Redistribution, in: Denis Mueller (ed.): The Political Economy of Growth, New Haven, 1983, pp. 261–276.

  21. Daron Acemoglu, James Robinson: Inefficient Redistribution, CEPR Discussion Paper, No. 2122, London 1999.

  22. Norbert Berthold: Ansätze einer ökonomischen Theorie der Sozialpolitik—Normative und positive Aspekte, in: Jahrbuch für Wirtschaftswissenschaften, Vol. 42, 1991, pp. 145–178.

  23. Friedrich Heinemann: Die Psychologie irrationaler Wirtschaftspolitik am Beispiel des Reformstaus, ZEW Discussion Paper No. 00-12, Mannheim 2000; Allan Drazen: Political economy in macroeconomics, Princeton NJ 2000; Raquel Fernandez, Dani Rodrik? Resistance to Reform: Status Quo Bias in the Presence of Individualspecific Uncertainty, in: American Economic Review, Vol. 81, 1991, pp. 1146–1155.

  24. Assar Lindbeck: Redistribution Policy …, op. cit. and the Expansion of the Public Sector, in: Journal of Public Economics, Vol. 28, 1985. pp. 309–328.

  25. The financing of public expenditure via inflation will not be considered; see Milton Friedman: Government Revenue from Inflation, in: Journal of Political Economy, Vol. 79, 1971, pp. 846.

  26. For politico-economic explanations of budget deficits see Gian Maria Milesi-Ferretti: Fiscal Rules and the Budget Process, in: CEPR Discussion Paper. No. 1664, London 1997; Douglas Elmendorf, Gregory Mankiw: Government Debt, NBER Working Paper, No. 6470, Cambridge MA 1998.

  27. Gerhard Fels, Jürgen Matthes, Claus Schnabel: Germany: Between Corporatist Stability and Corporate Flexibility, in: Group of Thirty (eds.): The Evolving Corporation: Global Imperatives and National Responses, Washington DC 1999, pp. 83–125; Gilles Saint-Paul, op. cit., Understanding Labour Market Institutions, in: World Economics, Vol. 1, 2000, No. 2, pp. 73–87.

  28. Michael C. Burda: Product Market Regulation and Labor Market Outcomes: How Can Deregulation Create Jobs?, in: ifo Studien, Vol. 46, 2000, No. 1, pp. 55–72.

  29. Karl-Heinz Paqué: Structural Unemployment and Real Wage Rigidity in Germany, Kieler Studien, No. 301, Tübingen 1999; Hans Gersbach: Product Market Competition, Unemployment and Income Disparities, in: Weltwirtschaftliches Archiv, Vol. 135, 1999, No. 2, pp. 221–240.

  30. Assar Lindbeck: How can Economic Policy …, op. cit. Strike a Balance Between Economic Efficiency and Income Equality, in: Federal Reserve Bank of Kansas City (ed.): Income Equality: Issues & Policy Options, Kansas City 1998, pp. 295–336.

  31. Assar Lindbeck, Dennis Snower: The Insider-Outsider Theory of Employment and Unemployment, Cambridge MA 1988.

  32. Hans-Peter Klös, Holger Schäfer: Teilzeitarbeit und befristete Beschäftigung: Zur Arbeitsmarktrelevanz einer Reregulierung, in: iwtrends, Vol. 27, 2000, No. 4, pp. 74–88.

  33. Giuseppe Nicoletti, Stefano Scarpetta Oliver Boylaud: Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation, OECD Economics Department Working Papers, No. 226, Paris 1999.

  34. Giuseppe Nicoletti et al., op. cit.; Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation, OECD Economics Department Working Papers, No. 226, Paris 1999. Kees Koedijk, Jeroen Kremers: Market opening, regulation and growth in Europe, in: Economic Policy, Vol. 23, 1996, pp. 443–467.

Download references

Author information

Authors and Affiliations

Authors

Additional information

This publication is part of the project “Equality versus Efficiency” supported by informedia-Stiftung—Gemeinnützige Stiftung für Gesellschaftswissenschaften und Publizistik, Cologne.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Groemling, M. Why does redistribution not shrink when equality is high?. Intereconomics 37, 204–211 (2002). https://doi.org/10.1007/BF02930214

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF02930214

Keywords

Navigation