A Note on Income Distribution and Government Transfers

Posted: 22 Apr 1997

See all articles by William F. Bassett

William F. Bassett

Board of Governors of the Federal Reserve System (FRB)

John Burkett

University of Rhode Island

Louis Putterman

Brown University - Department of Economics

Date Written: February 1997

Abstract

Several authors have argued that inequality hinders growth by leading to high distorting taxes and transfers. We retest whether inequality and transfers are positively linked, using several alternative definitions and data sets including new income data assembled by the World Bank. We correct an error in a result of Persson and Tabellini (1994), show that the relationship across mixed country samples is if anything negative, confirm Perotti's (1996) finding that this relationship weakens or disappears when population structure (percent over age 65) is controlled for, and introduce two alternative theories of the distribution-transfer link that allow political influence to be a function of income.

JEL Classification: E61, O23, H21, H50, D31, D72

Suggested Citation

Bassett, William F. and Burkett, John and Putterman, Louis G., A Note on Income Distribution and Government Transfers (February 1997). Available at SSRN: https://ssrn.com/abstract=4839

William F. Bassett

Board of Governors of the Federal Reserve System (FRB) ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

John Burkett (Contact Author)

University of Rhode Island ( email )

Chaffe Hall
10 Chaffe Road #3
Kingston, RI 02881
United States
401-874-4122 (Phone)
401-792-3876 (Fax)

Louis G. Putterman

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3837 (Phone)
401-863-1970 (Fax)

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