Distribution of Wealth and Interdependent Preferences
We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counter-act the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality.
|Date of creation:||Sep 2008|
|Date of revision:|
|Publication status:||published in: Foundations and Trends in Microeconomics, 2010, 6 (4), 265-366|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mariacristina deNardi, 2000.
"Wealth Inequality and Intergenerational Links,"
Econometric Society World Congress 2000 Contributed Papers
0547, Econometric Society.
- Alberto Alesina & Eliana La Ferrara, .
"Preferences for Redistribution in the Land of Opportunities,"
178, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
- Alesina, Alberto F & La Ferrara, Eliana, 2002. "Preferences for Redistribution in the Land of Opportunities," CEPR Discussion Papers 3155, C.E.P.R. Discussion Papers.
- Alberto Alesina & Eliana La Ferrara, 2001. "Preferences for Redistribution in the Land of Opportunities," NBER Working Papers 8267, National Bureau of Economic Research, Inc.
- Alberto Alesina & Eliana La Ferrara, 2001. "Preferences for Redistribution in the Land of Opportunities," Harvard Institute of Economic Research Working Papers 1936, Harvard - Institute of Economic Research.
- Brent Kreider, 2003.
"Income Uncertainty and Optimal Redistribution,"
Southern Economic Journal,
Southern Economic Association, vol. 69(3), pages 718-725, January.
- Peter Kooreman & Lambert Schoonbeek, 2004. "Characterizing Pareto Improvements in an Interdependent Demand System," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(3), pages 427-443, 08.
- Andrew Grodner & Thomas J. Kniesner, 2006.
"Social Interactions in Labor Supply,"
Journal of the European Economic Association,
MIT Press, vol. 4(6), pages 1226-1248, December.
- William A. Brock & Steven N. Durlauf, 2001.
"Discrete Choice with Social Interactions,"
Review of Economic Studies,
Oxford University Press, vol. 68(2), pages 235-260.
- Bernheim, B Douglas & Stark, Oded, 1988. "Altruism within the Family Reconsidered: Do Nice Guys Finish Last?," American Economic Review, American Economic Association, vol. 78(5), pages 1034-45, December.
- Uri Possen & Pierre Pestieau & Steven Slutsky, 2002. "Randomization, revelation, and redistribution in a Lerner world," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(3), pages 539-553.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3684. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.