The Wealth Distribution and the Demand for Status

Eric R. Young ()
Authors registered in the RePEc Author Service: Yulei Luo ()

Macroeconomics from EconWPA

Abstract: Standard economic theories of asset markets assume that assets are valued entirely for the consumption streams they can finance. This paper examines the introduction of the demand for status (as a function of wealth) into a model of uninsurable idiosyncratic risk. We find that spirit of capitalism preferences lead to less inequality in wealth and more in consumption. They also imply very different responses to a move from a progressive to a flat income tax; with spirit of capitalism preferences, wealth inequality goes down when the economy moves to a flat tax regime.

JEL-codes: E (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: Written 2004-10-25
Note: Type of Document - pdf
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