"Inequality when People Produce Best what they Consume"
AbstractWe consider a model with two types of consumers, with each preferring a different variety of goods, and with each better at producing the type of good it prefers to consume. We find that under plausible conditions members of the majority group earn a higher wage and enjoy higher utility than members of the minority group; and that any one member of the minority group may gain by working in a firm producing goods preferred by the majority, but that all minority members could be better off if none worked in that sector. The results are broadly consistent with the stylized facts about recent increases in income inequality.
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Bibliographic InfoPaper provided by California Irvine - School of Social Sciences in its series Papers with number 98-99-13.
Length: 17 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF CALIFORNIA IRVINE, SCHOOL OF SOCIAL SCIENCES, IRVINECALIFORNIA 91717 U.S.A.
CONSUMPTION ; INEQUALITY ; ECONOMIC MODELS;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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