Do Redistributive Policies Affect Economic Growth?

Zheng Liu

Department of Economics, Concordia University, Montreal, Canada.

DOI: 10.4236/ti.2013.41B011                

Abstract

To reduce income inequality, redistributive policies are widely adopted by both federal and provincial governments in Canada. Quebec and Canada have a fairer society in OECD countries. However, their economic growth is slower than many other countries. This paper studies how these redistributive policies affect economic growth based on Canadian data for the first time. The growth model is based on standard augmented Solow model and includes several different self-defined policy indexes. Using high quality panel data spanning the period 1982 to 2009 calculated from statistic Canada’s website and Arellano-Bond panel technique, empirical analyses show that redistributive policy is negatively and significantly associated with economic growth. These findings are in accordance with many former literatures and may have important policy significance.

Keywords

Income Inequality and Economic Growth

Conflicts of Interest

The authors declare no conflicts of interest.

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