Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
987027 | Review of Economic Dynamics | 2009 | 10 Pages |
Abstract
This paper considers the long-run distribution of capital holdings in a model with complete asset markets and progressive taxation. Households are assumed to be heterogeneous in their labor market productivity. We show that this model is capable of producing a nondegenerate determinate wealth distribution. However, it also predicts that capital and labor income will be negatively correlated. These results are robust to the introduction of elastic labor supply and borrowing constraints.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Daniel R. Carroll, Eric R. Young,