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"Inequality when People Produce Best what they Consume"


  • Ranjan, P.
  • Glazer, A.


We consider a model with two types of consumers, with each preferring a different variety of goods, and with each better at producing the type of good it prefers to consume. We find that under plausible conditions members of the majority group earn a higher wage and enjoy higher utility than members of the minority group; and that any one member of the minority group may gain by working in a firm producing goods preferred by the majority, but that all minority members could be better off if none worked in that sector. The results are broadly consistent with the stylized facts about recent increases in income inequality.

Suggested Citation

  • Ranjan, P. & Glazer, A., 1999. ""Inequality when People Produce Best what they Consume"," Papers 98-99-13, California Irvine - School of Social Sciences.
  • Handle: RePEc:fth:calirv:98-99-13

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    References listed on IDEAS

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    8. Carol Ann Rogers & Kenneth A. Swinnerton, 1999. "Inequality, Productivity, and Child Labor," Labor and Demography 9907003, EconWPA, revised 30 Jul 1999.
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    10. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-427, June.
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    14. repec:fth:prinin:362 is not listed on IDEAS
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    More about this item



    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory


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