STATUS IN A CANONICAL MACRO MODEL: LABOUR SUPPLY, GROWTH AND INEQUALITY

Authors

  • CHRISTOPHER TSOUKIS,

    1. Economics, LMBS, London Metropolitan University
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  • FRÉDÉRIC TOURNEMAINE

    1. School of Economics and RIPED, University of the Thai Chamber of Commerce
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    • This paper has been presented at the 7th Annual Meeting of the European Economics and Finance Society (EEFS2008), May 2008, under the title: ‘A Review of Socio-Macroeconomics: Status, Growth and Inequality’, the QASS conference at Brunel University, July 2009, the Economics Department, Athens University, the Rimini Centre Annual Conference in Economics and Finance, June 2010, and the 6th Centre for Growth and Business Cycles Research, University of Manchester biannual Conference, July 2011. Thanks are due to conference and seminar participants, in particular Avichai Snir and Barry Harper, for helpful comments.


  • Manuscript received 15.9.11; final version received 9.3.12.

Abstract

We introduce status in a standard (‘canonical’) macro model of growth and distribution. Status is introduced in a flexible way that allows for intrinsic and extrinsic motivation, loss aversion, heterogeneity in motives and inequality aversion. We incorporate such considerations in the model and derive implications for growth, inequality and labour supply. We review empirical evidence related to these variables, and show that the predictions of the model with status are consistent with these observations. Thus, status can offer a rich set of new explanations related to important empirical patterns.

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