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Inequalities and Patience for Tomorrow

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  • Kazumichi Iwasa

    (Institute of Economic Research, Kyoto University, Japan)

  • Laixun Zhao

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper examines how impatience interacts with inequalities in economic devel- opment. In a society of intrinsic inequality, we show that (i) poor households tend to bene t more from positive shocks under decreasing marginal impatience (DMI) than un- der constant marginal impatience (CMI) and increasing marginal impatience (IMI); (ii) an unequal society may be preferable for poor households under DMI; (iii) urbanization can increase the income inequality, while raising overall welfare; (iv) under DMI even if all households are allowed to own assets, with di¤erent initial asset holdings, the economy will not converge to the steady state where everybody is a capitalist.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2013-04.pdf
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2013-04.

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Length: 29 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:kob:dpaper:dp2013-04

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  1. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
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  18. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.
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