【Abstract】

This paper develops an endogenous growth model that incorporates wealth-enhanced preferences for social status and labor-market frictions to investigate the role of social status in determining unemployment and long-run growth. We show that the increase in the desire for social status reduces the unemployment rate, but its effect on long-run growth is unclear. We then calibrate our model to the U.S. economy and find that an increase in the desire for social status lowers the unemployment rate and enhances the economic growth rate in the long run.

【Keywords】

endogenous growth, labor search, social status, unemployment

【Authors】

Hung-Ju Chen, National Taiwan University

Dongpeng Liu, Nanjing University

Xiangbo Liu, International Monetary Institute, Renmin University of China