Aversion to Inequality and Segregating Equilibria
This working paper shows that models where preferences of individuals depend not only on their allocations, but also on the well-being of other persons, can produce both large and testable effects. We study the allocation to firms of workers with heterogeneous productivities to firms. We show that even small deviations from purely selfish preferences lead to widespread workplace skill segregation. This result holds for a broad class and distribution of social preferences. That is, workers of different abilities tend to work in different firms, as long as they care somewhat more about the utilities of workers who are close.
|Date of creation:||Jul 2007|
|Date of revision:|
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- de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February.
- Kremer, M & Maskin, E, 1996.
"Wage Inequality and Segregation by Skill,"
96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
- Cabrales Goitia Antonio & Calvó-Armengol Antoni & Pavoni Nicola, 2007.
"Social Preferences, Skill Segregation and Wage Dynamics,"
201053, Fundacion BBVA / BBVA Foundation.
- Antonio Cabrales & Antoni Calvó-Armengol & Nicola Pavoni, 2008. "Social Preferences, Skill Segregation, and Wage Dynamics," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 65-98.
- Antonio Cabrales & Antoni Calvo-Armengol & Nicola Pavoni, 2005. "Social Preferences, Skill Segregation, and Wage Dynamics," 2005 Meeting Papers 205, Society for Economic Dynamics.
- Antonio Cabrales & Antoni Calvó-Armengol & Nicola Pavoni, 2004. "Social Preferences, Skill Segregation and Wage Dynamics," Working Papers 181, Barcelona Graduate School of Economics.
- Fershtman, C. & Weiss, Y. & Hvide, H.K., 2001. "Status Concerns and the Organization of Work," Papers 2001-2, Tel Aviv.
- Pedro Rey Biel, 2004.
"Inequity aversion and team incentives,"
- Pedro Rey-Biel, 2007. "Inequity Version and Team Incentives," UFAE and IAE Working Papers 677.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Pedro Rey-Biel, . "Inequity Aversion and Team Incentives," Working Papers 319, Barcelona Graduate School of Economics.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, December.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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