A numerical example of redistribution from growth

Abstract

This paper gives a very simple model for illustrating the types of changes needed to redistribute income from a growing national income. In theory, redistribution can occur out of current income or future income (additional income). In practice, if one redistributes out of growth, it means that redistribution is being post pond, delayed. It is essential to realize that any redistribution makes some people worse off relative to others, and this cannot be achieved without structural change. Assume at the outset that we have an economy characterized by the following hypothetical distribution. By standards of poor countries, this is not an extremely unequal distribution.