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Wiley InterScience | |||||||||
  Economics & PoliticsVolume 16 Issue 3, Pages 287 - 320 Published Online: 27 Oct 2004 © 2010 Blackwell Publishing Ltd
Abstract | References | Full Text: PDF (Size: 256K) | Related Articles | Citation Tracking  INEQUALITY, REDISTRIBUTION, AND RENT-SEEKING Copyright © Blackwell Publishing Ltd 2004 ABSTRACTThis paper presents a non-median voter model of redistribution in which greater inequality leads to lower redistribution. Bargaining between interest groups and politicians over exemptions implies that individuals with sufficiently high income will not pay taxes in equilibrium. Therefore, voters will set tax rates low enough so as to control the incentives for rent-seeking. An increase in inequality, by putting more income in the hands of individuals that can buy exemptions, will lead to lower equilibrium redistribution. The model can be used to account for a negative relationship between inequality and growth and provides a new explanation of why the poor do not expropriate the rich in democracies. | 
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