A Rational Theory of the Size of Government

  title={A Rational Theory of the Size of Government},
  author={Allan H. Meltzer and Scott F. Richard},
  journal={Journal of Political Economy},
  pages={914 - 927}
In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule. Voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting. The share of earned income redistributed depends on the voting rule and on the distribution of productivity in the economy. Under majority rule, the equilibrium tax share balances… 
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