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Non-monotonic welfare dynamics in a growing economy

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  • Varvarigos, Dimitrios

Abstract

In an overlapping generations economy with endogenous income growth, I combine themes from the work of Cooper et al. (2001), Kapur (2005) and Eaton and Eswaran (2009) in order to provide an example of an economy whose welfare dynamics are non-monotonic. Particularly, the evolution of social welfare can be distinguished between two different regimes that arise naturally during the process of economic development. At relatively early stages, status concerns are inactive and welfare increases following the rising consumption of normal goods. During the later stages, however, individuals engage in some type of status competition that does not allow consumption to improve their well-being: their welfare actually declines as successive generations of agents increase labour effort at the expense of leisure.

Suggested Citation

  • Varvarigos, Dimitrios, 2011. "Non-monotonic welfare dynamics in a growing economy," Journal of Macroeconomics, Elsevier, vol. 33(2), pages 303-312, June.
    • Handle: RePEc:eee:jmacro:v:33:y:2011:i:2:p:303-312
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    References listed on IDEAS

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    Cited by:

    1. Xiang Wei & Hailin Qu & Emily Ma, 2016. "How Does Leisure Time Affect Production Efficiency? Evidence from China, Japan, and the US," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 101-122, May.
    2. Karine Constant & Marion Davin, 2018. "Unequal vulnerability to climate change and the transmission of adverse effects through international trade," CEE-M Working Papers 18-05, CEE-M, Universitiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    3. Dimitrios Varvarigos & Nikolaos Kontogiannis, 2017. "Entrepreneurial Status, Social Norms, and Economic Growth," Discussion Papers in Economics 17/05, Department of Economics, University of Leicester.
    4. Karine Constant & Marion Davin, 2018. "Unequal vulnerability to climate change and the transmission of adverse effects through international trade," Working Papers 2018.01, FAERE - French Association of Environmental and Resource Economists.

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