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Sector‐Specific Externalities And Status Preferences In The Uzawa‐Lucas Model

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  • KOICHI KAWAMOTO

Abstract

This paper shows that introducing preferences for social status based on human capital holdings modifies the finding of Gómez (2004) that sector‐specific externalities associated with human capital in the goods sector do not violate the optimality of the competitive economy in the Uzawa–Lucas model. The effect of an increase in the degree of sector‐specific externalities is qualitatively the same as that of an increase in the strength of the desire for status. Hence, paradoxically, a greater degree of sector‐specific externalities makes human capital accumulation more excessive from the social point of view.

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  • Koichi Kawamoto, 2008. "Sector‐Specific Externalities And Status Preferences In The Uzawa‐Lucas Model," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 312-323, September.
    • Handle: RePEc:bla:jecrev:v:59:y:2008:i:3:p:312-323
    DOI: 10.1111/j.1468-5876.2008.00419.x
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    References listed on IDEAS

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    Cited by:

    1. Davis, Lewis S., 2018. "Political economy of growth with a taste for status," Journal of Public Economics, Elsevier, vol. 168(C), pages 35-46.

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