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Income inequality in a Job-Search Model with heterogeneous discount factors (Revised Version, Forthcoming 2006, Revista Economia)

  • Cysne, Rubens Penha

This paper investigates the income inequality generated by a jobsearch process when di§erent cohorts of homogeneous workers are allowed to have di§erent degrees of impatience. Using the fact the average wage under the invariant Markovian distribution is a decreasing function of the discount factor (Cysne (2004, 2006)), I show that the Lorenz curve and the between-cohort Gini coe¢ cient of income inequality can be easily derived in this case. An example with arbitrary measures regarding the wage o§ers and the distribution of time preferences among cohorts provides some insights into how much income inequality can be generated, and into how it varies as a function of the probability of unemployment and of the probability that the worker does not Önd a job o§er each period.

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Paper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 611.

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Date of creation: 01 Jan 2006
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Handle: RePEc:fgv:epgewp:611
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  1. Athanasopoulos, George & Issler, João Victor & Guillen, Osmani Teixeira Carvalho, 2005. "Forecasting accuracy and estimation uncertainty using VAR Models with short- and long-term economic restrictions: A Monte-Carlo Study," Economics Working Papers (Ensaios Economicos da EPGE) 589, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  2. Barbosa, Fernando de Holanda, 2005. "The contagion effect of public debt on monetary policy: the brazilian experience," Economics Working Papers (Ensaios Economicos da EPGE) 591, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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  4. Issler, Joao Victor & de Mello Franco-Neto, Afonso Arinos & de Carvalho Guillen, Osmani Teixeira, 2008. "The welfare cost of macroeconomic uncertainty in the post-war period," Economics Letters, Elsevier, vol. 98(2), pages 167-175, February.
  5. Ricardo Cavalcanti & Ed Nosal, 2009. "Some benefits of cyclical monetary policy," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 39(2), pages 195-216, May.
  6. Pissarides, Christopher A, 1974. "Risk, Job Search, and Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1255-67, Nov.-Dec..
  7. Marco Bonomo & Carlos Carvalho, 2010. "Imperfectly Credible Disinflation under Endogenous Time-Dependent Pricing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 799-831, 08.
  8. Flôres Junior, Renato Galvão & Watanuki, Masakazu, 2006. "Integration options for mercosul - an investigation Uusing the AMIDA Model," Economics Working Papers (Ensaios Economicos da EPGE) 610, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  9. Cysne, Rubens Penha, 2005. "An overview of some historical brazilian macroeconomic series and some open questions," Economics Working Papers (Ensaios Economicos da EPGE) 592, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  10. Terra, Maria Cristina T. & Abreu, Ana Lucia Vahia de, 2005. "Purchasing power parity: the choice of price index," Economics Working Papers (Ensaios Economicos da EPGE) 588, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  11. Bonomo, Marco Antônio Cesar & Terra, Maria Cristina T., 2005. "Special interests and political business cycles," Economics Working Papers (Ensaios Economicos da EPGE) 597, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  12. Lima, Luiz Renato Regis de Oliveira & Sampaio, Raquel Menezes Bezerra & Gaglianone, Wagner Piazza, 2005. "Limite de endividamento e sustentabilidade fiscal no Brasil: uma abordagem via modelo quantílico auto-regressivo (QAR)," Economics Working Papers (Ensaios Economicos da EPGE) 602, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  13. Rubens Penha Cysne, 2005. "Equity-Premium Puzzle: Evidence From Brazilian Data," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 088, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  14. Samuel de Abreu Pessoa & Pedro Cavalcanti Ferreira, 2005. "The Effects of Longevity and Distortions on Education and Retirement," 2005 Meeting Papers 424, Society for Economic Dynamics.
  15. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 113-126.
  16. Lima, Luiz Renato Regis de Oliveira & Sampaio, Raquel Menezes Bezerra, 2005. "The asymmetric behavior of the U.S. public debt," Economics Working Papers (Ensaios Economicos da EPGE) 593, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  17. Cysne, Rubens Penha, 2004. "A search-theoretic explanation for the negative correlation between labor income and impatience," Economics Working Papers (Ensaios Economicos da EPGE) 558, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  18. Araújo, Aloísio Pessoa de & Funchal, Bruno, 2005. "Past and future of the bankruptcy law in Brazil and Latin America," Economics Working Papers (Ensaios Economicos da EPGE) 599, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  19. Ferreira, Pedro Cavalcanti & Nascimento, Leandro Gonçalves do, 2005. "Welfare and growth effects of alternative fiscal rules for infrastructure investment in Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 604, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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