Inequality, status effects and trade
AbstractIn this paper we attempt to examine the role of social inequality and status effects in driving trade between two countries which differ systematically only in terms of income-distribution using a status-driven model of consumption involving a status and a non-status good. Our model illustrates that when trade opens up, the country characterized by a higher level of inequality is likely to export the non-status good to the country characterized by a lower level of inequality, thus, establishing the extent of inequality as a determining factor behind comparative advantage.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40225.
Date of creation: 22 Jul 2012
Date of revision:
Inequality; Status effects; Trade;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
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- Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007.
"Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles,"
IZA Discussion Papers
2840, Institute for the Study of Labor (IZA).
- 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.
- Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001.
"Status Effects and Negative Utility Growth,"
Royal Economic Society, vol. 111(473), pages 642-65, July.
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