Suen, Richard M. H. (2012): Time Preference and the Distributions of Wealth and Income.
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This paper analyzes the connection between time preference heterogeneity and economic inequality. To achieve this, we extend the standard neoclassical growth model by introducing three additional features, namely (i) heterogeneity in consumers' discount rates, (ii) direct preferences for wealth, and (iii) human capital formation. The second feature prevents the wealth distribution from collapsing into a degenerate distribution. The third feature generates a strong positive correlation between earnings and capital income across consumers. A calibrated version of the model is able to generate patterns of wealth and income inequality that are very similar to those observed in 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:||20. Jan 2012 13:27|
|Last Modified:||16. Feb 2013 00:29|
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Available Versions of this Item
Time Preference and the Distributions of Wealth and Income. (deposited 23. Oct 2010 14:10)
- Time Preference and the Distributions of Wealth and Income. (deposited 20. Jan 2012 13:27) [Currently Displayed]