The pure effect of social preferences on regional location choices: The evolving dynamics of convergence to a steady state population distribution

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Dokumentart: Article
Date: 2019-04-05
Source: University of Tübingen Working Papers in Economics and Finance ; No. 118
Language: English
Faculty: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Department: Wirtschaftswissenschaften
DDC Classifikation: 330 - Economics
Keywords: Economics
Other Keywords:
Social preferences
Distaste for low relative income
A cardinal measure of income relative deprivation
Interregional locational choices
Relocation dynamics
Steady-state spatial distribution
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This paper tracks the consequences of individuals’ desire to align their location with their social preferences. The social preference studied in the paper is distaste for relative deprivation, measured in a cardinal manner. Location is conceived as social space, with individuals choosing to relocate if, as a result, their relative deprivation will be reduced, holding their incomes constant. Conditions are provided under which the associated dynamics reaches a spatial steady state, the number of periods it takes to reach a steady state is specified, and light is shed on the robustness of the steady state outcome. By way of simulation it is shown that for large populations, a steady state of the relocation dynamics is almost always reached, typically in one period, and that cycles are more likely to occur when the populations’ income distributions are more equal.

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