Inequality, status effects and trade
In this paper we attempt to examine the role of social inequality and status effects in driving trade between two countries which differ systematically only in terms of income-distribution using a status-driven model of consumption involving a status and a non-status good. Our model illustrates that when trade opens up, the country characterized by a higher level of inequality is likely to export the non-status good to the country characterized by a lower level of inequality, thus, establishing the extent of inequality as a determining factor behind comparative advantage.
|Date of creation:||22 Jul 2012|
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- Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008.
"Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles,"
Journal of Economic Literature,
American Economic Association, vol. 46(1), pages 95-144, March.
- Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
- Ann Harrison & John McLaren & Margaret S. McMillan, 2010.
"Recent Findings on Trade and Inequality,"
NBER Working Papers
16425, National Bureau of Economic Research, Inc.
- Cooper, Ben & Garcia-Penalosa, Cecilia & Funk, Peter, 2001.
"Status Effects and Negative Utility Growth,"
Royal Economic Society, vol. 111(473), pages 642-65, July.
- Ireland, N. J., 2001. "Optimal income tax in the presence of status effects," Journal of Public Economics, Elsevier, vol. 81(2), pages 193-212, August.
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