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Intergenerational Earnings Mobility, Inequality, and Growth

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Author Info
Ann L. Owen
David N. Weil

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Abstract

We examine a model in which per capita income, inequality, intergenerational mobility, and returns to education are all determined endogenously. Individuals earn wages depending on their ability, which is a random variable. They purchase an education with transfers received from their parents, and are subject to liquidity constraints. In the model, multiple steady state equilibria are possible: countries with identical tastes and technologies can reach differing rates of mobility, inequality, and per capita income. Equilibria with higher levels of output also have lower inequality, higher mobility, and more efficient distribution of education.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6070.

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Date of creation: Jun 1997
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Handle: RePEc:nbr:nberwo:6070

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Find related papers by JEL classification:
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October. [Downloadable!] (restricted)
  2. Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1995. "Capital Mobility in Neoclassical Models of Growth," NBER Working Papers 4206, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Durlauf, Steven N., 1994. "Spillovers, stratification, and inequality," European Economic Review, Elsevier, vol. 38(3-4), pages 836-845, April. [Downloadable!] (restricted)
  4. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Blackwell Publishing, vol. 60(1), pages 35-52, January. [Downloadable!] (restricted)
  5. Benabou, R., 1992. "Heterogeneity, Stratification, and Growth," Working papers 93-4, Massachusetts Institute of Technology (MIT), Department of Economics.
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  6. Hopenhayn, Hugo A & Prescott, Edward C, 1992. "Stochastic Monotonicity and Stationary Distributions for Dynamic Economies," Econometrica, Econometric Society, vol. 60(6), pages 1387-406, November. [Downloadable!] (restricted)
  7. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February. [Downloadable!] (restricted)
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  8. Tamura, R., 1991. "From Decay to Growth : A Dynamic Equilibrium Model of Income Distribution," Working Papers 91-18, University of Iowa, Department of Economics.
  9. Galor, Oded & Tsiddon, Daniel, 1997. " The Distribution of Human Capital and Economic Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 93-124, March. [Downloadable!] (restricted)
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  10. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July. [Downloadable!] (restricted)
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  11. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June. [Downloadable!] (restricted)
  12. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank. [Downloadable!]
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  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Fernández, Raquel & Guner, Nezih & Knowles, John, 2001. "Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality," CEPR Discussion Papers 3040, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Riccarda Longaretti, 2001. "Wealth Distribution, Investment in Human Capital and Occupational Choice When Capital Markets Are Imperfect," Working Papers 38, University of Milano-Bicocca, Department of Economics, revised Nov 2001. [Downloadable!]
  3. Ryo Arawatari & Tetsuo Ono, 2009. "Inequality, Mobility and Redistributive Taxation in a Finance-constrained Economy," Discussion Papers in Economics and Business 09-28, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  4. Leo Kaas & Stefan Zink, 2007. "Human Capital and Growth Cycles," Economic Theory, Springer, vol. 31(1), pages 19-33, April. [Downloadable!] (restricted)
  5. Murat F. Iyigun & Ann L. Owen, 1997. "Risk, entrepreneurship and human capital accumulation," Finance and Economics Discussion Series 1997-37, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  6. Hassler, John & Rodríguez Mora, José Vicente & Zeira, Joseph, 2000. "Inequality and Mobility," CEPR Discussion Papers 2497, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Emilio Colombo & Akos Valentinyi, 2002. "Occupational Choice, Financial Market Imperfections and Development," Working Papers 49, University of Milano-Bicocca, Department of Economics, revised Jan 2002. [Downloadable!]
  8. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics. [Downloadable!]
  9. Riccarda Longaretti & Domenico Delli Gatti, 2002. "Monetary Policy and the Distribution of Wealth in a OLG Economy with Heterogeneous Agents, Money and Bequests," Working Papers 60, University of Milano-Bicocca, Department of Economics, revised Oct 2002. [Downloadable!]
  10. Kazutoshi Miyazawa, 2005. "Growth and Inequality: A Demographic Explanation," STICERD - Distributional Analysis Research Programme Papers 75, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
    Other versions:
  11. Ana Hidalgo-Cabrillana, 2004. "Does Asymmetric Information Promote Talented People?," Economics Working Papers we042809, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  12. Andreas Schäfer, 2004. "The Political Economy and the Interaction between Endogenous Fertility and Inequality," DEGIT Conference Papers c009_041, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  13. James B. Davies & Jie Zhang & Jinli Zeng, 2003. "Intergenerational Mobility under Private vs. Public Education," University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers 20034, University of Western Ontario, RBC Financial Group Economic Policy Research Institute. [Downloadable!]
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  14. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December. [Downloadable!]
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  15. Alexander Haupt, 2005. "The Evolution of Public Spending on Higher Education in a Democracy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  16. Alfredo Cuevas, 2001. "Short-and Long-Term Poverty and Social Policy in a "Snakes and Ladders" Model of Growth," IMF Working Papers 01/172, International Monetary Fund. [Downloadable!]
  17. Nathan Sussman, 2006. "Income Inequality in Paris in the Heyday of the Commercial Revolution," DEGIT Conference Papers c011_043, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  18. Riccarda Longaretti & Domenico Delli Gatti, 2006. "The Non-Superneutrality of Money and its Distributional Effects when Agents are Heterogeneous and Capital Markets are Imperfect," Working Papers 95, University of Milano-Bicocca, Department of Economics, revised May 2006. [Downloadable!]
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