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Occupation-induced status, social norms, and economic growth

Author

Listed:
  • Kontogiannis, Nikolaos
  • Litina, Anastasia
  • Varvarigos, Dimitrios

Abstract

We analyse a monetary growth model where entrepreneurs borrow funds to invest in projects that produce capital goods. In addition to their varying pecuniary returns, different projects also vary with respect to the status they confer to the entrepreneurs who operate them. We show that (i) social status increases the growth rate, but this effect is mitigated by a social norm that inversely links overall levels of employment in the high-return project with the status conferred to it; (ii) the combined effect of social status and inflation is a source of transitional dynamics in an environment where such dynamics would not emerge if considerations of occupational prestige were absent; (iii) when the social norm affects social status, the economy's dynamics may be manifested in the form of endogenous volatility; (iv) the presence and characteristics of social status can generate a negative correlation between volatility and growth.

Suggested Citation

  • Kontogiannis, Nikolaos & Litina, Anastasia & Varvarigos, Dimitrios, 2019. "Occupation-induced status, social norms, and economic growth," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 348-360.
  • Handle: RePEc:eee:jeborg:v:163:y:2019:i:c:p:348-360
    DOI: 10.1016/j.jebo.2019.04.027
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    Keywords

    Social status; Norms; Economic growth; Cycles;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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