Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/224547 
Year of Publication: 
2020
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2020: Gender Economics
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
The article is concerned with understanding the impact of social preferences and wealth inequality on aggregate economic outcomes. We investigate how different manifestations of other-regarding preferences affect incentive contracts at the microeconomic level and how these in turn translate into macroeconomic outcomes. Increasing the workers' sensitivity to inequality raises effort and reduces wage costs for poor but not necessarily for rich workers. A parameterized version of the model roughly mimicking relevant key features of the industrialized world shows that, at the general equilibrium, increased initial wealth differences raise aggregate profit and output but entail distributional utility losses and increased inequality.
Subjects: 
other-regarding preferences
incentives
general equilibrium
inequality
wealth
income
inequality aversion
competitiveness
JEL: 
D31
D50
D63
D82
M52
M54
Document Type: 
Conference Paper

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