The quest for status and endogenous labor supply: The relative wealth framework

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Reihe Ökonomie / Economics Series ; No. 181

Classification and Topics

• Classification: Wirtschaft ; Externalities ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Macroeconomics: Consumption; Saving; Wealth
• Subject: status ; relative consumption ; relative wealth ; endogenous labor supply ; Arbeitsangebot ; Optimales Wachstum ; Investition ; Wohlfahrtstheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fisher, Walter H. ; Hof, Franz X.
• Event: Veröffentlichung
• (who): Institute for Advanced Studies (IHS)
• (where): Vienna
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/72263
• Last update: 10.03.2025, 11:44 AM CET