FACTOR SHARES AND SAVINGS IN ENDOGENOUS GROWTH

In models of steady investment-driven growth, an individual's propensi ty to save depends on how much of his income is drawn from accumulated factors of production (''capital'') rather than from nonaccumulated f actors. When agents are heterogeneous in this respect, growth-oriented policies have distributional consequences, and in the absence of lump -sum redistribution, their implementation faces political constraints. If the median voter is capital-poor relative to the economy's represe ntative agent, political interactions tend to slow down growth when po licy acts on capital's income share and tend to accelerate it when inv estment subsidies are the policy instrument of choice.