Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099445 | Journal of Economic Dynamics and Control | 2008 | 33 Pages |
Abstract
We examine the evolution of the distributions of wealth and income in a Ramsey model in which agents differ in their initial capital endowment and where the labor supply is endogenous. The assumption that the utility function is homogeneous implies that the macroeconomic equilibrium is independent of the distribution of wealth and allows us to characterize fully income and wealth dynamics. We find that although the dynamics of the distribution of wealth are similar under fixed and flexible labor, those of the income distribution are not. In response to a structural change, income inequality may move in opposite ways depending on whether or not the labor supply is fixed.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Stephen J. Turnovsky, Cecilia GarcÃa-Peñalosa,