Redistributive Taxation, Democracy and Growth.

The recent theorical literature on the political economy of growth displays contrasting findings on the nature of the political link between income inequality and growth. In this paper, we explain this contrast and argue that in a democracy, when redistribution is in the form of government expenditure on education, and government expenditure does not crowd out private expenditures by altruistic agents, a negative relation between inequality and growth emerges in equilibrium.