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Social Status, Labour Market Frictions and Endogenous Growth

Author

Listed:
  • Hung-Ju Chen

    (National Taiwan University)

  • Dongpeng Liu

    (Nanjing University)

  • Xiangbo Liu

    (Renmin University of China and IMI)

Abstract

This paper develops an endogenous growth model that incorporates wealth-enhanced preferences for social status and labour market frictions to investigate the role of social status in determining unemployment and long-run growth. We show that the increase in the desire for social status reduces the unemployment rate, but its effect on long-run growth is unclear. We then calibrate our model to the US economy and find that an increase in the desire for social status lowers the unemployment rate and enhances the economic growth rate in the long run.

Suggested Citation

  • Hung-Ju Chen & Dongpeng Liu & Xiangbo Liu, 2018. "Social Status, Labour Market Frictions and Endogenous Growth," The Japanese Economic Review, Springer, vol. 69(2), pages 226-250, June.
    • Handle: RePEc:spr:jecrev:v:69:y:2018:i:2:d:10.1111_jere.12153
    DOI: 10.1111/jere.12153
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    References listed on IDEAS

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    More about this item

    Keywords

    E21; J64; O41;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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