Voting, Wealth Heterogeneity, and Endogenous Labor Supply

We examine the link between voting outcomes, wealth heterogeneity, and endogenous labor-leisure choice in the majority-voting-endogenous-growth frameworks of Alesina and Rodrik (1994) and Das and Ghate (2004). We augment these frameworks to incorporate leisure-dependent utility and allow households to vote on factor-specific income taxes. When agents vote on factor-specific taxes, we show that the asymptotic convergence of factor holdings does not imply unanimity over the growth-maximizing tax policy in the steady state. Unanimity over growth-maximizing policies holds only when agents vote on a general income tax, and when agents vote on factor-specific taxes but labor is exogenous.