Inequality and incentives with societal other-regarding preferences

Benjamin Bental, Jenny Kragl

Research output: Contribution to journalArticlepeer-review


The article is concerned with understanding the impact of social preferences and wealth inequality on aggregate economic outcomes. We investigate how different manifestations of societal other-regarding preferences affect labor relationships and incentive contracts at the microeconomic level and how these in turn translate into macroeconomic outcomes. Increasing the workers’ sensitivity to inequality raises effort and reduces wage costs for poor but not necessarily for rich workers. A parameterized version of the model roughly mimicking relevant key features of the industrialized world shows that, at the general equilibrium, increased initial wealth differences raise aggregate profit and output but entail distributional utility losses and increased inequality.

Original languageEnglish
Pages (from-to)1298-1324
Number of pages27
JournalJournal of Economic Behavior and Organization
StatePublished - Aug 2021

Bibliographical note

Publisher Copyright:
© 2021 Elsevier B.V.


  • Competitiveness
  • General equilibrium
  • Incentives
  • Income
  • Inequality
  • Inequality aversion
  • Other-regarding preferences
  • Wealth

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management


Dive into the research topics of 'Inequality and incentives with societal other-regarding preferences'. Together they form a unique fingerprint.

Cite this