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Status, the Distribution of Wealth, and Growth
Author(s) -
Corneo Giacomo,
Jeanne Olivier
Publication year - 2001
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00245
Subject(s) - economics , wealth distribution , endogenous growth theory , distribution (mathematics) , distribution of wealth , consumption (sociology) , growth model , growth rate , rank (graph theory) , microeconomics , simple (philosophy) , econometrics , inequality , mathematics , market economy , human capital , mathematical analysis , social science , geometry , combinatorics , sociology , philosophy , epistemology
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.