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Human Capital and Income Distribution Dynamics

Author

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  • Massimo Giannini

    (University of Rome "Tor Vergata")

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.

Suggested Citation

  • Massimo Giannini, 1998. "Human Capital and Income Distribution Dynamics," GE, Growth, Math methods 9802004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpge:9802004
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    References listed on IDEAS

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    More about this item

    Keywords

    Human Capital Accumulation Personal Income Distribution Diffusion Processes;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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