The Quest for Status and Endogenous Labor Supply: The Relative Wealth Framework

Fisher, Walter H. and Hof, Franz X. (November 2005) The Quest for Status and Endogenous Labor Supply: The Relative Wealth Framework. IHS Economics Series 181

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Abstract or Table of Contents

Abstract: This paper introduces the quest for status into the Ramsey model with endogenous labor supply. We focus our attention on relative wealth preferences. In contrast to relative consumption preferences, they allow for the possibility that agents work too little in the long run, while under both specifications the steady-state levels of consumption and the stock of physical capital exceed their socially optimal counterparts. The initial phase of transitional dynamics is unambiguously characterized by under-consumption and excessive work effort. The social optimum can be replicated by taxing capital income, where the optimal tax rate increases as physical capital accumulates.;

Item Type: IHS Series
Keywords: 'Status' 'Relative consumption' 'Relative wealth' 'Endogenous labor supply'
Classification Codes (e.g. JEL): D62, D91, E21
Status: Published
Date Deposited: 26 Sep 2014 10:38
Last Modified: 22 Jul 2017 06:05
URI: http://irihs.ihs.ac.at/id/eprint/1673

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