Human Capital and Income Distribution Dynamics
AbstractThe 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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Date of creation: 26 Feb 1998
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Human Capital Accumulation Personal Income Distribution Diffusion Processes;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D90 - Microeconomics - - Intertemporal Choice - - - 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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