Suen, Richard M. H. (2010): Time Preference and the Distributions of Wealth and Income.
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This paper presents a dynamic competitive equilibrium model in which heterogeneity in time preferences alone can generate the observed patterns of wealth and income inequality in the United States. This model generalizes the standard deterministic neoclassical growth model by introducing (i) a direct preference for wealth by the consumers and (ii) human capital formation. The first feature prevents the wealth distribution from collapsing into a degenerate distribution. The second feature generates a strong positive correlation between earnings and wealth across agents. A calibrated version of this model is able to replicate the wealth and income distributions of the United States.
|Item Type:||MPRA Paper|
|Original Title:||Time Preference and the Distributions of Wealth and Income|
|Keywords:||Inequality, Heterogeneity, Time Preference, Human Capital|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E21 - Consumption; Saving; Wealth
|Depositing User:||Richard M. H. Suen|
|Date Deposited:||23. Oct 2010 14:10|
|Last Modified:||20. Feb 2013 04:51|
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