We explore the accumulation of assets in the presence of limited insurance against idiosyncratic shocks, borrowing constraints and endogenous labor productivity due to the so-called "nutrition curve". We show that in such an environment, any stationary equilibrium is characterized by a polarized distribution of wealth. That is, there are only extremely rich and extremely poor agents.
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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number
274.
Length: Date of creation: 03 Dec 2006 Date of revision: Handle: RePEc:red:sed006:274
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Find related papers by JEL classification: D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply