Professor Parantap Basu parantap.basu@durham.ac.uk
Professor
Redistributive Innovation Policy, Inequality and Efficiency
Basu, P.; Getachew, Y.
Authors
Y. Getachew
Abstract
We examine the efficiency and distributional effects of regressive and progressive public R&D policies that target high-tech and low-tech sectors using a heterogenous-agent growth model with in-house R&D and incomplete capital markets. We find that such policies have important implications for efficiency, inequality and social mobility. A regressive public R&D investment financed by income tax could boost growth and welfare via a positive effect on individual savings and effort. However, it could also lower growth and welfare via its effect on the efficiency--inequality trade off. Thus, the relationship between public R&D spending and welfare is hump shaped admitting an optimal degree of regressivity in public R&D spending. Using our baseline model and the US state level GDP data, we back out the degree of regressiveness of public R&D investment in US states. We find that US states are more regressive in their R&D investment than the optimal regressiveness implied by our growth model.
Citation
Basu, P., & Getachew, Y. (2020). Redistributive Innovation Policy, Inequality and Efficiency. Journal of Public Economic Theory, 22(3), 532-554. https://doi.org/10.1111/jpet.12386
Journal Article Type | Article |
---|---|
Acceptance Date | Jun 6, 2019 |
Online Publication Date | Jul 30, 2019 |
Publication Date | Jun 30, 2020 |
Deposit Date | Jun 7, 2019 |
Publicly Available Date | Jul 30, 2021 |
Journal | Journal of Public Economic Theory |
Print ISSN | 1097-3923 |
Electronic ISSN | 1467-9779 |
Publisher | Wiley |
Peer Reviewed | Peer Reviewed |
Volume | 22 |
Issue | 3 |
Pages | 532-554 |
DOI | https://doi.org/10.1111/jpet.12386 |
Public URL | https://durham-repository.worktribe.com/output/1294946 |
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Copyright Statement
This is the accepted version of the following article: Basu, P. & Getachew,Y. (2020). Redistributive Innovation Policy, Inequality and Efficiency. Journal of Public Economic Theory 22(3): 532-554 which has been published in final form at https://doi.org/10.1111/jpet.12386. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
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