Income inequality in a job-search model with heterogeneous time preferences
AbstractThis paper investigates the income inequality generated by a job-search process when diÂ¤erent cohorts of homogeneous workers are allowed to have diÂ¤erent degrees of impatience. Using the fact the average wage under the invariant Markovian distribution is a decreasing function of the time preference (Cysne, 2004), I show that the Lorenz curve and the between-cohort Gini coeÂ¢ cient of income inequality can be easily derived in this case. An example with arbitrary measures regarding the wage oÂ¤ers and the distribution of time preferences among cohorts provides some quantitative insights into how much income inequality can be generated, and into how it varies as a function of the probability of unemployment and of the probability that the worker does not find a job offer each period.
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Bibliographic InfoPaper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 538.
Date of creation: 01 Mar 2004
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Other versions of this item:
- Rubens P. Cysne, 2004. "Income Inequality In A Job-Search Model With Heterogeneous Time Preferences?," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] 051, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- D60 - Microeconomics - - Welfare Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-02 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
- Ales Bulir, 1998. "Income Inequality," IMF Working Papers 98/7, International Monetary Fund.
- Cysne, Rubens Penha, 2004. "A search-theoretic explanation for the negative correlation between labor income and impatience," Economics Working Papers (Ensaios Economicos da EPGE) 558, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Pissarides, Christopher A, 1974. "Risk, Job Search, and Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1255-67, Nov.-Dec..
- Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
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