Human capital and income distribution dynamics
AbstractThe paper assumes a continuum of two period-lived agents; agents are identical except for inherited income. Young agents allocate their inheritance between consumption and investment in human capital under uncertainty. In the second period they receive a wage proportional to the accumulated human capital and invest in offspring. Two main results arise: a low earning per unit of human capital leads economy to converge to a stationary income distribution whatever the initial distribution. Viceversa, for a sufficiently high wage an endogenous growth operates and the distributive dynamics depends on initial conditions. In this case different redistributive policies are analyzed.
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Bibliographic InfoPaper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 34.
Date of creation: Jan 1999
Date of revision:
human capital accumulation; personal income distribution; diffusion processes; Fokker-Planck.;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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