On the Distribution of Wealth and Intergenerational Transfers
The authors develop a simple behavioral model of intergenerational transfers, with individuals be ing subject to uncertainty about their children's incomes. Individual s differ with respect to innate ability and to wealth transfers they receive at birth. The distributions of total wealth, of total income, and of their components are uniquely determined from the equilibrium distribution of intergenerational transfers, for which existence an d uniqueness are proven. For a particular utility function, and provi ded that earned income follows a stable law, the authors show that so do all endogenous distributions. Intergenerational transfers are rel atively more equally distributed than earnings, capital income, and l ifetime wealth. Copyright 1987 by University of Chicago Press.