Status, the Distribution of Wealth, and Growth

Giacomo Corneo and Olivier Jeanne

Scandinavian Journal of Economics, 2001, vol. 103, issue 2, 283-293

Abstract: We analyze a simple model of endogenous growth in which individuals care about both consumption and their rank in the distribution of wealth. We show that the steady‐growth rate of the economy increases with both the strength of the status‐seeking motive and the initial equality of the wealth distribution. Contrary to the basic model of endogenous growth, the equilibrium growth rate is not necessarily smaller than in the social optimum, and we identify the circumstances under which the two coincide.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:bla:scandj:v:103:y:2001:i:2:p:283-293

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