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Redistribution and the Notion of Social Status

  • Ennio Bilancini

    ()

  • Leonardo Boncinelli

    ()

In this paper we study the impact of redistributive policies when agents can signal their relative standing by spending on a conspicuous good. In particular, we analyze how the shape of the status function (i.e. how relative standing is computed and evaluated) may affect the equilibrium outcome of the model. Our main nding is that, if status depends in a cardinal way on individuals' relative standing, then a redistribution from the rich to the poor can be Pareto improving. We identify a necessary and sucient condition for the latter case.

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File URL: http://www.recent.unimore.it/wp/RECent-wp29.pdf
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Paper provided by University of Modena and Reggio E., Dept. of Economics "Marco Biagi" in its series Center for Economic Research (RECent) with number 029.

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Length: pages 21
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:mod:recent:029
Contact details of provider: Web page: http://www.recent.unimore.it/

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