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Gain versus pain from status and ambition: Effects on growth and inequality

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  • Tournemaine, Frederic
  • Tsoukis, Christopher

Abstract

To shed light on growth, distribution and the relationship between the two, we develop an endogenous growth model with heterogeneous individuals who care about social status. Individuals' heterogeneity stems from two sources: their innate skills and their degree of ambition. While the willingness of individuals to accumulate wealth depends on whether they experience gain or pain from loss of status, we show that ambition of individuals plays an important role regarding growth and distribution: ambition can inhibit or foster accumulation of wealth, then in turn growth. In such a context, though we show that growth can be positively or negatively correlated with inequality, the case of a positive correlation between the two appears to be the most plausible.

Suggested Citation

  • Tournemaine, Frederic & Tsoukis, Christopher, 2010. "Gain versus pain from status and ambition: Effects on growth and inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 286-294, April.
  • Handle: RePEc:eee:soceco:v:39:y:2010:i:2:p:286-294
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    Citations

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    Cited by:

    1. Christopher Tsoukis & Frédéric Tournemaine, 2013. "Status In A Canonical Macro Model: Labour Supply, Growth And Inequality," Manchester School, University of Manchester, vol. 81, pages 65-92, October.
    2. Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2013. "Endogenous fiscal policies, environmental quality, and status-seeking behavior," Ecological Economics, Elsevier, vol. 88(C), pages 32-40.
    3. Tournemaine, frederic & Tsoukis, Chris, 2008. "Status, endogenous reference standards, and the growth-inequality relation: A note," MPRA Paper 10420, University Library of Munich, Germany.
    4. Frederic Tournemaine & Christopher Tsoukis, 2015. "Public Expenditures, Growth, and Distribution in a Mixed Regime of Education with a Status Motive," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(5), pages 673-701, October.

    More about this item

    Keywords

    Social aspirations Ambition Inequality Economic behaviour Growth;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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