Advanced Search
MyIDEAS: Login to save this paper or follow this series

Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy

Contents:

Author Info

  • Stark, Oded
  • Hyll, Walter

Abstract

This paper considers a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups. Skill levels are viewed as occupational groups, and moving up the skill ladder by acquiring additional human capital, which in itself is rewarding, leads to a shift in the individual’s inclination to compare himself with a different, and on average better-paid, comparison group, which in itself is penalizing. The paper sheds new light on the dynamics of human capital formation, and suggests novel policy interventions to encourage human capital formation in the aggregate and, at the same time, reduce inter-group income inequality.

Download Info

If 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.
File URL: http://mpra.ub.uni-muenchen.de/28909/
File Function: original version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/30623/
File Function: revised version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28909.

as in new window
Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:pra:mprapa:28909

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Human capital formation; Skill levels as occupational groups; Interpersonal comparisons; Relative deprivation; Tax policy; Subsidization;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  2. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Working Papers, Human Capital and Economic Opportunity Working Group 2011-037, Human Capital and Economic Opportunity Working Group.
  3. C. Simon Fan & Oded Stark, 2011. "A Theory Of Migration As A Response To Occupational Stigma," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 549-571, 05.
  4. Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp04-029, Harvard University, John F. Kennedy School of Government.
  5. Alois Stutzer, . "The Role of Income Aspirations in Individual Happiness," IEW - Working Papers 124, Institute for Empirical Research in Economics - University of Zurich.
  6. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 83-95, March.
  7. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers, Stockholm - International Economic Studies 537, Stockholm - International Economic Studies.
  8. Michael J. Boskin, 1975. "Notes on the Tax Treatment of Human Capital," NBER Working Papers 0116, National Bureau of Economic Research, Inc.
  9. Gerry Mooney, 2009. "The Spirit Level: Why More Equal Societies Almost Always Do Better," Local Economy, Taylor and Francis Journals, Taylor and Francis Journals, vol. 24(8), pages 705-706.
  10. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, Econometric Society, vol. 65(5), pages 1005-1028, September.
  11. Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
  12. Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(2), pages 321-24, May.
  13. Marek Kapicka, 2006. "Optimal Income Taxation with Human Capital Accumulation and Limited Record Keeping," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(4), pages 612-639, October.
  14. Flavio Cunha & James J. Heckman, 2009. "The Economics and Psychology of Inequality and Human Development," NBER Working Papers 14695, National Bureau of Economic Research, Inc.
  15. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(114), pages 175-208, April.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Stark, Oded & Kobus, Martyna & Jakubek, Marcin, 2012. "A concern about low relative income, and the alignment of utilitarianism with egalitarianism," Economics Letters, Elsevier, Elsevier, vol. 114(3), pages 235-238.
  2. Stark, Oded & Sorger, Gerhard, 2012. "Income redistribution going awry: The reversal power of the concern for relative deprivation," University of Tuebingen Working Papers in Economics and Finance 47, University of Tuebingen, Faculty of Economics and Social Sciences.
  3. Stark, Oded, 2012. "Integration, social distress, and policy formation," University of Tuebingen Working Papers in Economics and Finance 25, University of Tuebingen, Faculty of Economics and Social Sciences.
  4. Stark, Oded, 2013. "Stressful Integration," European Economic Review, Elsevier, Elsevier, vol. 63(C), pages 1-9.
  5. Stark, Oded & Jakubek, Marcin & Falniowski, Fryderyk, 2013. "Reconciling the Rawlsian and the utilitarian approaches to the maximization of social welfare," University of Tuebingen Working Papers in Economics and Finance 65, University of Tuebingen, Faculty of Economics and Social Sciences.
  6. Stark, Oded, 2012. "Policy responses to a dark side of the integration of regions and nations," Discussion Papers, University of Bonn, Center for Development Research (ZEF) 122036, University of Bonn, Center for Development Research (ZEF).
  7. Stark, Oded, 2012. "Policy responses to a dark side of the integration of regions," University of Tuebingen Working Papers in Economics and Finance 28, University of Tuebingen, Faculty of Economics and Social Sciences.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:28909. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.