Immiserizing Growth in a Closed Economy
Posted: 19 Nov 2003
This paper develops a model with three key features: a factor market distortion, monopoly power in the product market, and indivisibilities in consumption. We show that in this setting, there are multiple equilibria: one with high and the other with low equilibrium wages, incomes and output. Also that even in a closed economy, growth may be immiserizing. Finally, that redistribution could be a "rich man's game."
Keywords: Multiple equilibria, immiserizing growth, factor market distortions, indivisibilities in consumption, income distribution
JEL Classification: H23, O33
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