The Survival of the Welfare State

@article{Hassler2001TheSO,
  title={The Survival of the Welfare State},
  author={John Hassler and Jos{\'e} Vincente Rodr{\'i}guez Mora and Kjetil Storesletten and Fabrizio Zilibotti},
  journal={Microeconomic Theory eJournal},
  year={2001}
}
This paper provides an analytical characterization of Markov perfect equilibria in a politico-economic model with repeated voting, where agents vote over distortionary income redistribution. The key feature of the theory is that the future constituency of redistributive policies depends positively on the current level of redistribution, since this affects both private investments and the future distribution of voters. Agents vote rationally and fullly anticipate the effects of their political… 
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