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Human Capital and Income Distribution Dynamics

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  • Massimo Giannini

    (University of Rome "Tor Vergata")

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    Abstract

    The paper assumes a continuum of two period-lived agents; agents are identical except for the inherited income. Young agents optimally allocate their inherited income between consumption and investment in human capital in a stochastic environment. In the second period they receive a wage proportional to the accumulated human capital and invest in offspring. Two main results are provided: a low earning per unit of human capital leads the economy to converge to a stationary income distribution whatever the initial distribution. Viceversa, for a sufficently high wage an endogenous growth is at work and the income distribution dynamics depends on the initial conditions. In this case several redistributive policies are analized.

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    File URL: http://128.118.178.162/eps/ge/papers/9802/9802004.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series GE, Growth, Math methods with number 9802004.

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    Date of creation: 26 Feb 1998
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    Handle: RePEc:wpa:wuwpge:9802004

    Note: Type of Document - PDF; prepared on IBM PC -; to print on HP;
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    Web page: http://128.118.178.162

    Related research

    Keywords: Human Capital Accumulation Personal Income Distribution Diffusion Processes;

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    References

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    1. Benabou, R., 1996. "Inequality and Growth," Working Papers 96-22, C.V. Starr Center for Applied Economics, New York University.
    2. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
    3. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
    4. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
    5. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
    6. repec:fth:coluec:595 is not listed on IDEAS
    7. Vaughan, R N, 1979. "Class Behaviour and the Distribution of Wealth," Review of Economic Studies, Wiley Blackwell, vol. 46(3), pages 447-65, July.
    8. Daron Acemoglu, 1995. "Matching, Heterogeneity and the Evolution of Income Distribution," Working papers 95-25, Massachusetts Institute of Technology (MIT), Department of Economics.
    9. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
    10. Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June.
    11. Atkinson, A. B., 1995. "Is the Welfare State necessarily an obstacle to economic growth?," European Economic Review, Elsevier, vol. 39(3-4), pages 723-730, April.
    12. Galor, O. & Tsiddon, D., 1996. "The Distribution of Human Capital and Economic Growth," Papers 18-96, Tel Aviv - the Sackler Institute of Economic Studies.
    13. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
    14. Guido Enrico Tabellini & Torsten Persson, 1991. "Growth, Distribution and Politics," IMF Working Papers 91/78, International Monetary Fund.
    15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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