Inequality when People Produce Best what they Consume

P. Ranjan and Amihai Glazer
Authors registered in the RePEc Author Service: Priyaranjan Jha

Working Papers from California Irvine - School of Social Sciences

Abstract: We consider a model with two types of consumers, with each preferring a different variety of goods, and with each better at producing the type of good it prefers to consume. We find that under plausible conditions members of the majority group earn a higher wage and enjoy higher utility than members of the minority group; and that any one member of the minority group may gain by working in a firm producing goods preferred by the majority, but that all minority members could be better off if none worked in that sector. The results are broadly consistent with the stylized facts about recent increases in income inequality.

Keywords: CONSUMPTION; INEQUALITY; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: D11 D63 (search for similar items in EconPapers)
Pages: 17 pages
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:fth:calirv:98-99-13

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