| Income inequality is at the heart of economics because it is intimately related to the design of incentive based schemes. The feature that makes this topic yet more interesting is the political economy and moral aspects of it. It can be argued that some income inequality is desirable because it increases efficiency; however, a large degree of inequality may not be politically sustainable, in addition, fairness considerations may be raised. My research plan is to identify economic frictions that relate to inequality, and to understand how the shape of income distribution affects economic variables. This work is divided in three chapters, the first one points out how voting behavior in developing countries may prevent the income gap from closing. In the second chapter, I analyze the redistributive consequences of the shape of income distribution. In the last chapter, I look at a specific economic friction that plagues developing economies: crime, and study its consequences to the distribution of income. |
