Unemployment and Inheritance Linkage: A Dynamic General Equilibrium Analysis
This general equilibrium model seeks to find an explicit relationship between inheritance (and hence, the long run wealth distribution) and the unemployment, generated due to search-friction in the labor market. The existence of unemployment in the equilibrium is guaranteed together with a perfect and an imperfect labor market. The model displays that inheritance affects unemployment positively in micro-level. Amongst the different countries as a whole, a negative relationship between income and unemployment is established. The model ensures that a dynasty does not get stagnated in a particular income class. By simulating the model, we isolate the initial income distribution from the long run income path and question the efficacy of the celebrated trap theory.
|Date of creation:||14 Apr 2009|
|Date of revision:|
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Web page: https://mpra.ub.uni-muenchen.de
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Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 19 pages.
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070808, University of California-Irvine, Department of Economics.
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- Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1988. "The Structure of Simple General Equilibrium Models with Frictional Unemployment," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1267-93, December.
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