TY  - RPRT
        AU  - Grodner, Andrew
AU  - Kniesner, Thomas J.
        TI  - Distribution of Wealth and Interdependent Preferences
        PY  - 2008/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 3684
        UR  - https://www.iza.org/publications/dp3684
        AB  - 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.
        KW  - social interactions
KW  - wealth inequality
KW  - earnings inequality
KW  - social welfare
        ER  -