Dr. Mayuri Chaturvedi (University of California-Irvine) will be presenting a seminar tomorrow (March 29, 2017) at 10.30 A.M. at SEANZA Conference Hall

Title: “Rent-seeking Induced Inequality Traps”.

Abstract: Does inequality affect rent seeking and vice-versa? Social scientists have argued that inequality fosters rent seeking and that rent seeking is likely to reinforce existing inequalities.​ ​In this paper, I formalize these inter-linkages by modeling rent seeking in an unequal endowment economyand analyze the conditions under which an inequality trap would exist. I find that when the costs are exogenous, more inequality fosters a greater proportion of rentiers which in turn perpetuates existing inequities. When costs are adjusted to maximize revenue, the proportion of rentiers shrinks. However, both the cost of rent seeking and ex-post inequality increase. The results show how economies can end up in inequality traps under very weak conditions in the presence of rent seeking.