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(1) For economic arguments against large pay differences, see Milgrom (1988) and Lazear (1989).

(2) Empirically, there is obviously a strong correlation between social status and material well-being. There is, for instance, a clear positive correlation between the ranking of occupations in terms of social status by respondents in surveys and the average income in these occupations. However, the status ranking of occupations can be much better explained if education is added to income as an explanatory variable (see Perrot, 1999). See the survey by Weiss and Fershtman (1998) for references on the implications of Veblen's theory in economic models.

(3) Ball et al. (2001) created status by arbitrarily awarding a "gold star" (a pin) to half of the subjects. All the subjects then played a standard buyer/seller game (oral double auction). Status was found to be a significantly positive (and unconscious--the gold star was never mentioned in the strategy the players reported foll g

(4) In the pioneering work of Frank (1984), status is derived from the ranking of relative income. This assumption, which is natural when dealing with macroeconomic problems such as growth, consumption, and saving, is not appropriate when focusing on internal labor markets. Firms differentiate employees' status through other means than relative income (e.g., the hierarchical structure). In fact, wages are rarely public information in firms.

(5) They show that when status, which is based on wage comparisons, is derived locally (i.e., within the firm), firms choose to mix workers to enhance "cultural trade." This policy increases total output and wage dispersion. In contrast, when some workers care about global status (i.e., they compare wages with a reference group outside the firm) while others care about local status, segregation might arise.