Abstract
In this lecture I first give an explanation for invidious preferences based on the (evolutionary) competition for resources. Then I show that these preferences have wide ranging and empirically relevant effects on labor markets, such as: workplace skill segregation, gradual promotions, wage increases that have no relation with productivity and downward wage flexibility. I suggest that labor and human resource economics can benefit from including envy into the standard set of factors considered in their theoretical and empirical models.
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Presidential address delivered at the 34th Symposium of the Spanish Economic Association in Valencia, Spain, on December 10, 2009. The research in this paper (as well as a lot else in my academic life) owes a lot to the clever questions of Luis Corchón. I am grateful to the co-authors that made it possible to provide some worthy answers: Antoni Calvó-Armengol, Nicola Pavoni, Raffaele Miniaci, Marco Piovesan and Giovanni Ponti. I gratefully acknowledge the financial support from the Spanish Ministry of Science and Technology under grants CONSOLIDER INGENIO 2010 (CSD2006-0016), and ECO2009-10531.
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Cabrales, A. The causes and economic consequences of envy. SERIEs 1, 371–386 (2010). https://doi.org/10.1007/s13209-010-0028-1
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DOI: https://doi.org/10.1007/s13209-010-0028-1
Keywords
- Envy
- Interdependent preferences
- Skill segregation
- Wage dynamics
- Wage dispersion
- Internal labor market
- Recursive contracts