skip to content

Faculty of Economics

Journal Cover

Alexopoulos, J. and  Cavalcanti, T. V. D.

Cheap home goods and persistent inequality

Economic Theory

Vol. 45(3) pp. 417-451 (2010)

Abstract: There exists a large literature which shows that public education is favorable for growth because it increases the level of human capital and at the same time it tends to produce a more even income distribution. More egalitarian societies are also associated with less social conflicts, and individuals have a lower tendency to report themselves happy when inequality is high. Therefore, it is important to study the reasons why the elite opposes the development of a strong public education system. It might be that education is related to social status and a strong public education system might threaten the elite's political power. We show that one aspect of social status is the specialization of skilled workers in high-paid jobs and the abundance of unskilled workers in the production of cheap 'home goods' in the market, such as painting and cleaning a house, babysitting, and/or cooking. We emphasize the role of general equilibrium price adjustments to show that depending on the level of

JEL Codes: J13, O11

Author links: Tiago Cavalcanti  

Publisher's Link:

Papers and Publications

Recent Publications

Onatski, A. and Wang, C. Alternative Asymptotics for Cointegration Tests in Large VARs Econometrica [2018]

Elliott, M. and Golub, B. A Network Approach to Public Goods Journal of Political Economy [2019]

Aidt, T. S. and Franck, R. What motivates and oligarchic elite to democratize? Evidence from the roll call vote on the Great Reform Act of 1832 Journal of Economic History [2019]

Corsetti, G., Mavroeidi, E., Thwaites, G. and Wolf, M. Step away from the zero lower bound: small open economies in a world of secular stagnation Journal of International Economics [2019]