Institutional reform, technology adoption and redistribution

What is it about?

Policies aimed at redistribution are decided collectively, based on preferences of people or their representatives in government. There is typically conflict over what type of redistribution is used, depending on people's preferences. This is a theoretical paper which looks at two ways of achieving redistribution - through reforms aimed at facilitation of the adoption of technologies, or through direct transfers to people. We show that technology adoption can be delayed depending on how governments decide to allocate revenues to these two methods of redistribution. This decision depends on how such issues are decided collectively - i.e. through democratic means, social planning or something in-between. The broader point made is that egalitarian preferences of policymakers do not necessarily translate into more egalitarian outcomes for the economy.

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