Template-Type: ReDIF-Paper 1.0

Author-Name: Jan Schumacher
Author-X-Name-First: Jan
Author-X-Name-Last: Schumacher

Title: 	The tragedy (or virtue?) of in-kind redistribution: How the poor pays for the rich's status concerns
	
Abstract: The model describes a two person economy, in which one individual with
positive exogenous income is altruist towards an individual with no income.
The rich individual cares for her own social status. She evaluates her status
by comparing disposable net cash incomes. When deciding on the size and on
the structure of redistribution, the rich person decides that at least part of
the redistribution is done in–kind, even if a private substitute for the publicly
provided good is available. The amount of in–kind transfers that is provided
exceeds the unconstrained Marshallian demand of the poor individual for the
good in question. Hence, optimal policy restricts the poor in his allocative
choices. The overall resource transfer is lower when the richer cares for her
status compared to a situation in which she does not.
Length:  23 pages
Creation-Date:  2008-01
File-URL: http://www.bgpe.de/texte/DP/039_schumacher.pdf
File-Format: Application/pdf
File-Function: First version, 2008
Number: 039
Classification-JEL: H42, D63, D64, D31
Keywords: Redistribution, in–kind transfers, altruism, status
Handle: RePEc:bav:wpaper:039_schumacher