Aversion to Inequality and Segregating Equilibria
AbstractThis working paper shows that models where preferences of individuals depend not only on their allocations, but also on the well-being of other persons, can produce both large and testable effects. We study the allocation to firms of workers with heterogeneous productivities to firms. We show that even small deviations from purely selfish preferences lead to widespread workplace skill segregation. This result holds for a broad class and distribution of social preferences. That is, workers of different abilities tend to work in different firms, as long as they care somewhat more about the utilities of workers who are close.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Fundacion BBVA / BBVA Foundation in its series Working Papers with number 201083.
Date of creation: Jul 2007
Date of revision:
Contract theory; mechanism design; envy; social preferences; skill segregation.;
Other versions of this item:
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Kremer & Eric Maskin, 1996.
"Wage Inequality and Segregation by Skill,"
NBER Working Papers
5718, National Bureau of Economic Research, Inc.
- Fershtman, C. & Weiss, Y. & Hvide, H.K., 2001. "Status Concerns and the Organization of Work," Papers 2001-2, Tel Aviv.
- de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February.
- Pedro Rey-Biel, 2007.
"Inequity Version and Team Incentives,"
UFAE and IAE Working Papers
677.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Antonio Cabrales & Antoni Calv�-Armengol & Nicola Pavoni, 2008.
"Social Preferences, Skill Segregation, and Wage Dynamics,"
Review of Economic Studies,
Oxford University Press, vol. 75(1), pages 65-98.
- Antonio Cabrales & Antoni Calvo-Armengol & Nicola Pavoni, 2005. "Social Preferences, Skill Segregation, and Wage Dynamics," 2005 Meeting Papers 205, Society for Economic Dynamics.
- Cabrales Goitia Antonio & Calvó-Armengol Antoni & Pavoni Nicola, 2007. "Social Preferences, Skill Segregation and Wage Dynamics," Working Papers 201053, Fundacion BBVA / BBVA Foundation.
- Antonio Cabrales & Antoni Calvó-Armengol & Nicola Pavoni, 2004. "Social Preferences, Skill Segregation and Wage Dynamics," Working Papers 181, Barcelona Graduate School of Economics.
- repec:bla:restud:v:75:y:2008:i:1:p:65-98 is not listed on IDEAS
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fundacion BBVA / BBVA Foundation).
If references are entirely missing, you can add them using this form.