About: We propose a highly schematic economic model in which, in some cases, wage inequalities lead to higher overall social welfare. This is due to the fact that high earners can consume low productivity, non essential products, which allows everybody to remain employed even when the productivity of essential goods is high and producing them does not require everybody to work. We derive a relation between heterogeneities in technologies and the minimum Gini coefficient required to maximize global welfare. Stronger inequalities appear to be economically unjustified. Our model may shed light on the role of non-essential goods in the economy, a topical issue when thinking about the post-Covid-19 world.   Goto Sponge  NotDistinct  Permalink

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  • We propose a highly schematic economic model in which, in some cases, wage inequalities lead to higher overall social welfare. This is due to the fact that high earners can consume low productivity, non essential products, which allows everybody to remain employed even when the productivity of essential goods is high and producing them does not require everybody to work. We derive a relation between heterogeneities in technologies and the minimum Gini coefficient required to maximize global welfare. Stronger inequalities appear to be economically unjustified. Our model may shed light on the role of non-essential goods in the economy, a topical issue when thinking about the post-Covid-19 world.
Subject
  • Zoonoses
  • Viral respiratory tract infections
  • COVID-19
  • Welfare
  • Chemical reactions
  • Occupational safety and health
  • Public economics
  • Demographic economics
  • Welfare economics
  • Scientific terminology
  • Economics models
  • Income inequality metrics
  • Technology companies based in California
  • Companies based in Palo Alto, California
  • Mobile phone manufacturers
  • Government aid programs
  • Conceptual modelling
  • 2015 establishments in California
  • American companies established in 2015
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