Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34808
Authors: 
Grodner, Andrew
Kniesner, Thomas J.
Year of Publication: 
2008
Series/Report no.: 
IZA discussion papers 3684
Abstract: 
We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counter-act the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality.
Subjects: 
Wealth inequality
earnings inequality
social welfare
social interactions
JEL: 
D31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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