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Aspirations and the Political Economy of Inequality

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  • Besley, Timothy J.

Abstract

In standard approaches to the political economy of inequality, the income distribution and the preferences of households are taken as fixed when studying how incomes are determined within and between nations. This paper makes the income distribution endogenous by supposing that aspirational parents can socialize children into having aspirational preferences which are modeled as a reference point in income space. The model looks at the endogenous determination of the level of income, income inequality and income redistribution where the proportion of aspirational individuals evolves endogenously according to payoffs along the equilibrium path. The paper discusses implications of the model for intergenerational mobility. It also shows how the income generation process is critical for the dynamics and welfare conclusions. Finally, it looks at some evidence from the World Values Survey in light of the theory.

Suggested Citation

  • Besley, Timothy J., 2016. "Aspirations and the Political Economy of Inequality," CEPR Discussion Papers 11446, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11446
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    Cited by:

    1. Karen Macours & Renos Vakis, 2017. "Sustaining Impacts When Transfers End: Women Leaders, Aspirations, and Investments in Children," NBER Chapters, in: The Economics of Poverty Traps, pages 325-355, National Bureau of Economic Research, Inc.
    2. De Juan, Alexander & Koos, Carlo, 2019. "The historical roots of cooperative behavior—Evidence from eastern Congo," World Development, Elsevier, vol. 116(C), pages 100-112.
    3. Paula Carrasco & Rodrigo Ceni & Ivonne Perazzo & Gonzalo Salas, 2019. "Are not any silver in the cloud? Subjective well-being among deprived young people," Documentos de Trabajo (working papers) 19-09, Instituto de Economia - IECON.
    4. Ross, Phillip H., 2019. "Occupation aspirations, education investment, and cognitive outcomes: Evidence from Indian adolescents," World Development, Elsevier, vol. 123(C), pages 1-1.

    More about this item

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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