IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v82y1998i2p379-404.html
   My bibliography  Save this article

The Distribution of Wealth with Imperfect Altruism

Author

Listed:
  • Dutta, Jayasri
  • Michel, Philippe

Abstract

In this paper, we study the distribution of wealth in an economy with infinitely lived families. Individual generations of each family may or may not be altruistic. This is represented as a preference shock which follows a first-order Markov process within each family, a feature representing imperfect altruism. Altruistic individuals care about the welfare of their children and are likely to leave bequests; selfish ones do not. This results in a non-trivial distribution of wealth among families at any point in time. We study an economy with a risk-free, linear production technology and show that a stationary distribution of wealth exists. This distribution is discrete and approximates the pareto distribution under additional restrictions. We also charac- terize conditions on the production technology which yields perpetual growth with increasing inequality.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dutta, Jayasri & Michel, Philippe, 1998. "The Distribution of Wealth with Imperfect Altruism," Journal of Economic Theory, Elsevier, vol. 82(2), pages 379-404, October.
  • Handle: RePEc:eee:jetheo:v:82:y:1998:i:2:p:379-404
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022-0531(97)92442-X
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Benveniste, L M & Scheinkman, J A, 1979. "On the Differentiability of the Value Function in Dynamic Models of Economics," Econometrica, Econometric Society, vol. 47(3), pages 727-732, May.
    2. Abel, Andrew B & Bernheim, B Douglas, 1991. "Fiscal Policy with Impure Intergenerational Altruism," Econometrica, Econometric Society, vol. 59(6), pages 1687-1711, November.
    3. Mirman, Leonard J. & Zilcha, Itzhak, 1975. "On optimal growth under uncertainty," Journal of Economic Theory, Elsevier, vol. 11(3), pages 329-339, December.
    4. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    5. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    6. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    7. Rao Aiyagari, S., 1989. "Equilibrium existence in an overlapping generations model with altruistic preferences," Journal of Economic Theory, Elsevier, vol. 47(1), pages 130-152, February.
    8. Laitner, John, 1992. "Random earnings differences, lifetime liquidity constraints, and altruistic intergenerational transfers," Journal of Economic Theory, Elsevier, vol. 58(2), pages 135-170, December.
    9. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    10. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    11. Laitner, John, 1993. "Long-run equilibria with borrowing constraints and altruism," Journal of Economic Dynamics and Control, Elsevier, vol. 17(1-2), pages 65-96.
    12. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    13. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.
    14. Zvi Eckstein & Martin S. Eichenbaum & Dan Peled, 1985. "The Distribution of Wealth and Welfare in the Presence of Incomplete Annuity Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 789-806.
    15. Muller, Walter III & Woodford, Michael, 1988. "Determinacy of equilibrium in stationary economies with both finite and infinite lived consumers," Journal of Economic Theory, Elsevier, vol. 46(2), pages 255-290, December.
    16. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, vol. 75(4), pages 777-791, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Degan, Arianna & Thibault, Emmanuel, 2016. "Dynastic accumulation of wealth," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 66-78.
    2. Michel, Philippe & Thibault, Emmanuel & Vidal, Jean-Pierre, 2006. "Intergenerational altruism and neoclassical growth models," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    3. Gevers, Louis & Michel, Philippe, 1998. "Economic Dynasties with Intermissions," Games and Economic Behavior, Elsevier, vol. 25(2), pages 251-271, November.
    4. Falk, Ita & Stark, Oded, 2001. "Dynasties and Destiny: On the Roles of Altruism and Impatience in the Evolution of Consumption and Bequests," Economica, London School of Economics and Political Science, vol. 68(272), pages 505-518, November.
    5. Jorge Durán, 2003. "Discounting long run average growth in stochastic dynamic programs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 395-413, September.
    6. Richard Barnett & Joydeep Bhattacharya & Helle Bunzel, 2013. "Deviant generations, Ricardian equivalence, and growth cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(1), pages 367-396, January.
    7. Higashi, Youichiro & Hyogo, Kazuya & Takeoka, Norio, 2009. "Subjective random discounting and intertemporal choice," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1015-1053, May.
    8. Jordi Caballé & Luisa Fuster, 2000. "Pay-as-you-go social security and the distribution of bequests," Economics Working Papers 468, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Shuhei Aoki & Makoto Nirei, 2014. "Zipf’s Law, Pareto’s Law, and the Evolution of Top Incomes in the U.S," UTokyo Price Project Working Paper Series 023, University of Tokyo, Graduate School of Economics.
    10. MoonJoong Tcha & Fiona Lio, 2002. "An Analysis of Food Aid and Altruism," Economics Discussion / Working Papers 02-19, The University of Western Australia, Department of Economics.
    11. Shuhei Aoki & Makoto Nirei, 2016. "Pareto Distribution of Income in Neoclassical Growth Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 25-42, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:82:y:1998:i:2:p:379-404. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.