 Diverging identities: a model of class formationPaul Collier Oxford Economic Papers, 2020, vol. 72, issue 3, 567-584 Abstract: This paper is an application of Identity Economics. Since the literature in this field is recent, the paper begins with an extensive review of the key contributions. The current paper analyses the process and psychological costs of social polarization arising from economic inequalities. It may have some application to the current social divisions evident in the votes for Brexit and Donald Trump, and protest movements such as the gilets jaunes. In a simple model, people rationally maximize their utility from esteem, by selecting a subjective salient identity from two objective identities: nationality and job. The model shows how an increase in wages for the upper half of the population can lead those with high incomes to drop nationality as their salient identity, forming a new ‘elite’ class. This rational switch in the identity of high-income workers has efficiency and redistributive effects, reducing aggregate utility and generating regressive transfers. JEL-codes: A14 B55 D63 D91 E71 Z13 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:72:y:2020:i:3:p:567-584. Ordering information: This journal article can be ordered from Access Statistics for this article Oxford Economic Papers is currently edited by James Forder and Francis J. Teal More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
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