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Endogenous persistent inequality

Author

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  • Falilou Fall

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The purpose of this paper is to demonstrate that inherited humain capital is a powerful vector of inequality formation and persistence, irrespective of its links with financial wealth endowment. This paper argues that the agents who inherit a low level of human capital bear a greater utility cost in their educational investment and that there are different profiles of returns on human capital within the economy. These two arguments are sufficient to generate an endogenous formation of workers' and entrepreneurs' groups and a continuum of steady states with inequality. Allowing for self-employment in the model generates the possibility of equality at equilibrium in addition to the inequality equilibrium with the emergence of a middle class.

Suggested Citation

  • Falilou Fall, 2005. "Endogenous persistent inequality," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00196084, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00196084
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00196084
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    Cited by:

    1. Growiec, Katarzyna & Growiec, Jakub, 2014. "Social Capital, Trust, And Multiple Equilibria In Economic Performance," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 282-315, March.
    2. Falilou Fall, 2006. "Formation endogène et persistance des inégalités," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 507-516.
    3. Growiec, Katarzyna & Growiec, Jakub, 2014. "Social Capital, Trust, And Multiple Equilibria In Economic Performance," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 282-315, March.

    More about this item

    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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