Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours?

9 Pages Posted: 27 Feb 2015

See all articles by Paul Frijters

Paul Frijters

Queensland University of Technology - School of Economics and Finance

Gigi Foster

UNSW Australia Business School, School of Economics

Date Written: March 2015

Abstract

Is the rise in inequality in Australia due to global changes in the distribution of marginal productivity or changes in the allocation of political favours? This article lays out the arguments for both views. Looking at the tax and subsidy changes that favour the rich, and considering that almost all the 200 richest Australians look like the beneficiaries of political favours rather than innovators or superstars, the article concludes that inequality is probably increasing due to changes in the political realm. The discussion outlines a research agenda and possible counterÔÇÉmoves, such as more direct democracy and having open markets for political favours.

Suggested Citation

Frijters, Paul and Foster, Gigi, Rising Inequality: A Benign Outgrowth of Markets or a Symptom of Cancerous Political Favours? (March 2015). Australian Economic Review, Vol. 48, Issue 1, pp. 67-75, 2015. Available at SSRN: https://ssrn.com/abstract=2571042 or http://dx.doi.org/10.1111/1467-8462.12096

Paul Frijters (Contact Author)

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia
(07) 3864 9364 (Phone)
(07) 3864 1500 (Fax)

HOME PAGE: http://www.bus.qut.edu.au/paulfrijters/index.jsp

Gigi Foster

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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