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Age, Luck, and Inheritance

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  • Jess Benhabib
  • Shenghao Zhu

Abstract

We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of inheritance, age and stochastic rates of capital return to wealth inequality, in particular to the Gini coefficient. We investigate the role of the fiscal and redistributive policies for wealth inequality and social welfare.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14128.

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Date of creation: Jun 2008
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Handle: RePEc:nbr:nberwo:14128

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Citations

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Cited by:
  1. George-Marios Angeletos & Vasia Panousi, 2011. "Financial Integration, Entrepreneurial Risk and Global Imbalances," NBER Working Papers 16761, National Bureau of Economic Research, Inc.
  2. Jess Benhabib & Alberto Bisin & Shenghao Zhu, 2011. "The Distribution of Wealth and Fiscal Policy in Economies With Finitely Lived Agents," Econometrica, Econometric Society, Econometric Society, vol. 79(1), pages 123-157, 01.
  3. Panousi, Vasia, 2009. "Capital Taxation with Entrepreneurial Risk," MPRA Paper 24237, University Library of Munich, Germany.
  4. Jason DeBacker & Bradley Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2012. "The properties of income risk in privately held businesses," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2012-69, Board of Governors of the Federal Reserve System (U.S.).
  5. Panousi, Vasia, 2009. "Financial Integration and Capital Accumulation," MPRA Paper 24238, University Library of Munich, Germany.
  6. Gholamreza Hajargasht and William E. Griffiths, 2012. "Pareto-Lognormal Income Distributions:Inequality and Poverty Measures, Estimation and Performance," Department of Economics - Working Papers Series, The University of Melbourne 1149, The University of Melbourne.
  7. Hajargasht, Gholamreza & Griffiths, William E., 2013. "Pareto–lognormal distributions: Inequality, poverty, and estimation from grouped income data," Economic Modelling, Elsevier, Elsevier, vol. 33(C), pages 593-604.

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