Discussing efficiency-equity tradeoffs
Every year, Louis-Andre Gerard-Varet are a great forum to pitch papers in public economics. With an incredible mix of theorist and empirical researchers, every applied work receives all kinds of valuable insights. If that was not enough, the keynotes are wonderful, this year in particular Marc Fleurbaey shook our world presenting a totally new approach to an economic model of society (not merely economic interactions). Introducing the notion of social standing explicitly to modeling utility certainly pushes the frontier of science.
We presented our work on inequality in an overlapping economy with labor reallocation frictions. This paper contributes to the TRANSITION agenda. Thorough structural change occurs periodically across world economies. In a parsimonious overlapping generation setup with political economy, we present a novel result: structural change not only exacerbates the rise in inequality but it also strengthens preference for redistribution. Labor mobility frictions are instrumental in this mechanism.