Social Comparisons, Inequality, and Growth

Markus Knell

Journal of Institutional and Theoretical Economics (JITE), 1999, vol. 155, issue 4, 664-

Abstract: In this paper we will study the interaction of inequality and growth when people are assumed to care about their relative standing. We show that an increase in a societies' concern for relative standing aggravates a negative impact of inequality on growth if two conditions are fulfilled: Individuals have a higher concern for their present than for their future relative standing and they have a tendency to find their reference groups among people who are wealthier than they are themselves. We present some empirical evidence that conforms to this line of explanantion.

JEL-codes: D30 E21 O40 (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (48)

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