We present instrumental variables estimates of the relationship between the share of income accruing to the middle class and GDP per capita. The increase in GDP per capita that ASEAN economies experienced during 1970-2010 significantly contributed to a higher share of income accruing to the...

In many developing countries, a significant part of economic activity takes place in the informal sector. Earlier work has examined the determinants of the size of the informal sector, focusing separately on factors such as tax and regulation burden, financial market development, and the quality...

Public investment can cause the preferences of the decisive voter in one period to differ from preferences of the decisive voter in an earlier period. Forward-looking voters may therefore vote against a policy that would increase the incomes of all persons. The effect may arise when increased...

High inequality in human capital may result in appropriation. In anticipation, the rich may favor policies which induce a more equal distribution of human capital, such as income transfers and mandatory schooling. This paper compares several such alternatives. We find that mandatory schooling...

We consider two types of consumers, educated and uneducated, with each preferring a different variety of goods. A decisive set of persons can impose compulsory education on all. We find conditions under which educated persons will want to impose compulsory education, and conditions under which...