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Inequalities and Patience for Tomorrow

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  • Kazumichi Iwasa

    ()
    (Kyoto University)

  • Laixun Zhao

    ()
    (Kobe University)

Abstract

This paper examines how impatience interacts with inequalities in economic development. In a society of intrinsic inequality, we show that (i) poor households tend to benefit more from positive shocks under decreasing marginal impatience (DMI) than uner 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 different initial asset holdings, the economy will not converge to the steady state where everybody is a capitalist.

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Bibliographic Info

Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 847.

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Length: 28pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:kyo:wpaper:847

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  1. Lutz Hendricks, 2006. "How Important Is Discount Rate Heterogeneity for Wealth Inequality?," 2006 Meeting Papers 124, Society for Economic Dynamics.
  2. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
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  8. 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.
  9. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  10. Das, Mausumi, 2003. "Optimal growth with decreasing marginal impatience," Journal of Economic Dynamics and Control, Elsevier, vol. 27(10), pages 1881-1898, August.
  11. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
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  14. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
  15. Aghion, Philippe & Bolton, Patrick, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 151-72, April.
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  17. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.
  18. Ken-Ichi Hirose & Shinsuke Ikeda, 2008. "On Decreasing Marginal Impatience," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 259-274.
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