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Eating the Rich vs. Feeding the Poor: Borrowing Constraints and the Reluctance to Redistribute

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Abstract

This paper offers an explanation why most democracies arecharacterized by moderate taxation of wealth although thewealth distribution is persistently skewed to the right. Wemodel an economy in which agents have to acquire highereducation to qualify for skilled work and in which capitalmarket imperfections prevent poor individuals from making sucha profitable human capital investment. If these borrowingconstraints do not bind for members of the middle class, theymay rationally reject redistribution although both the currentand the future median of the wealth distribution are below themean.

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Authors and Affiliations

  1. Department of Economics, University of Konstanz, D-78457, Konstanz, Germany

    Philipp Harms & Stefan Zink

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  1. Philipp Harms
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  2. Stefan Zink
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Harms, P., Zink, S. Eating the Rich vs. Feeding the Poor: Borrowing Constraints and the Reluctance to Redistribute. Public Choice 116, 351–366 (2003). https://doi.org/10.1023/A:1024862825446

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