The Evolution of Ideology, Fairness and Redistribution

By: Alberto Alesina (Harvard University)
Guido Cozzi (Durham Business School)
Noemi Mantovan (Bangor University)

URL: http://d.repec.org/n?u=RePEc:dur:durham:2012_05&r=ltv

Ideas about what is “fair” influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We show how including beliefs about fairness can keep two otherwise identical countries in di¤erent development paths for a very long time. We show how different initial conditions regarding how “fair” is the same level of inequality can lead to two permanently different steady states. We also explore how bequest taxation can be an efficient way of redistributing wealth to correct “unfair” past accumulation of inequality
Keywords: Endogenous Growth, Basic and Applied R&D, Endogenous Technological Change, Common Law