Redistribution and the Notion of Social Status
Ennio Bilancini and
Leonardo Boncinelli ()
Center for Economic Research (RECent) from University of Modena and Reggio E., Dept. of Economics "Marco Biagi"
In this paper we study the impact of redistributive policies when agents can signal their relative standing by spending on a conspicuous good. In particular, we analyze how the shape of the status function (i.e. how relative standing is computed and evaluated) may affect the equilibrium outcome of the model. Our main nding is that, if status depends in a cardinal way on individuals' relative standing, then a redistribution from the rich to the poor can be Pareto improving. We identify a necessary and sucient condition for the latter case.
Keywords: social status; relative standing; consumption externalities; redistribution; signalling; conspicuous consumption; income inequality (search for similar items in EconPapers)
JEL-codes: D11 D31 D62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-soc
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Journal Article: Redistribution and the notion of social status (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:mod:recent:029
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