IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-00196084.html
   My bibliography  Save this paper

Endogenous persistent inequality

Author

Listed:
  • Falilou Fall

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The purpose of this paper is to demonstrate that inherited humain capital is a powerful vector of inequality formation and persistence, irrespective of its links with financial wealth endowment. This paper argues that the agents who inherit a low level of human capital bear a greater utility cost in their educational investment and that there are different profiles of returns on human capital within the economy. These two arguments are sufficient to generate an endogenous formation of workers' and entrepreneurs' groups and a continuum of steady states with inequality. Allowing for self-employment in the model generates the possibility of equality at equilibrium in addition to the inequality equilibrium with the emergence of a middle class.

Suggested Citation

  • Falilou Fall, 2005. "Endogenous persistent inequality," Post-Print halshs-00196084, HAL.
    • Handle: RePEc:hal:journl:halshs-00196084
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00196084
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-00196084/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ljungqvist, Lars, 1993. "Economic underdevelopment : The case of a missing market for human capital," Journal of Development Economics, Elsevier, vol. 40(2), pages 219-239, April.
    2. Galor, Oded & Tsiddon, Daniel, 1997. "Technological Progress, Mobility, and Economic Growth," American Economic Review, American Economic Association, vol. 87(3), pages 363-382, June.
    3. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    4. Oded Galor & Omer Moav, 2000. "Das Human Kapital," Working Papers 2000-17, Brown University, Department of Economics.
    5. Kiminori Matsuyama, 2000. "Endogenous Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 743-759.
    6. Dilip Mookherjee & Debraj Ray, 2002. "Contractual Structure and Wealth Accumulation," American Economic Review, American Economic Association, vol. 92(4), pages 818-849, September.
    7. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    8. Dilip Mookherjee & Debraj Ray, 2003. "Persistent Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 369-393.
    9. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    10. Durlauf, Steven N, 1996. "A Theory of Persistent Income Inequality," Journal of Economic Growth, Springer, vol. 1(1), pages 75-93, March.
    11. Philippe Aghion & Patrick Bolton, 1997. "A Theory of Trickle-Down Growth and Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(2), pages 151-172.
    12. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 85-117.
    13. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 35-52.
    14. Thomas Piketty, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(2), pages 173-189.
    15. Kiminori Matsuyama, 2001. "On the Rise and Fall of Class Societies," Discussion Papers 1326, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    16. Dominique Rouault, 2001. "Les revenus des indépendants et dirigeants : la valorisation du bagage personnel," Économie et Statistique, Programme National Persée, vol. 348(1), pages 35-59.
    17. Dunn, Thomas & Holtz-Eakin, Douglas, 2000. "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 282-305, April.
    18. Thomas Dunn & Douglas Holtz-Eakin, 1996. "Financial Capital, Human Capital, and the Transition to Self-Employment:Evidence from Intergenerational Links," NBER Working Papers 5622, National Bureau of Economic Research, Inc.
    19. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    20. Chatterjee, Satyajit, 1994. "Transitional dynamics and the distribution of wealth in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 54(1), pages 97-119, May.
    21. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-834, August.
    22. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Falilou Fall, 2006. "Formation endogène et persistance des inégalités," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 507-516.
    2. Growiec, Katarzyna & Growiec, Jakub, 2014. "Social Capital, Trust, And Multiple Equilibria In Economic Performance," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 282-315, March.
    3. Growiec, Katarzyna & Growiec, Jakub, 2014. "Social Capital, Trust, And Multiple Equilibria In Economic Performance," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 282-315, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dilip Mookherjee & debraj Ray, 2005. "Occupational Diversity and Endogenous Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-142, Boston University - Department of Economics.
    2. Asli Demirgüç-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 287-318, November.
    3. Dilip Mookherjee & Debraj Ray, 2003. "Persistent Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 369-393.
    4. Henry Ohlsson & Jesper Roine & Daniel Waldenstrom, 2006. "Long-Run Changes in the Concentration of Wealth: An Overview of Recent Findings," WIDER Working Paper Series RP2006-103, World Institute for Development Economic Research (UNU-WIDER).
    5. Vincenzo Lombardo, 2008. "Income distribution and Growth: A Critical Survey," Working Papers 11_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    6. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics.
    7. Oded, Galor, 2011. "Inequality, Human Capital Formation, and the Process of Development," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 441-493, Elsevier.
    8. Manuel Oechslin, 2009. "Creditor protection and the dynamics of the distribution in oligarchic societies," Journal of Economic Growth, Springer, vol. 14(4), pages 313-344, December.
    9. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1001-1026.
    10. Bertola, Giuseppe, 2000. "Macroeconomics of distribution and growth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 9, pages 477-540, Elsevier.
    11. Das, Mausumi, 2007. "Persistent inequality: An explanation based on limited parental altruism," Journal of Development Economics, Elsevier, vol. 84(1), pages 251-270, September.
    12. Koichiro Sano & Yasunobu Tomoda, 2019. "Persistent income gaps in an occupational choice model with multi‐goods," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 1-20, March.
    13. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    14. Mookherjee, Dilip & Napel, Stefan, 2007. "Intergenerational mobility and macroeconomic history dependence," Journal of Economic Theory, Elsevier, vol. 137(1), pages 49-78, November.
    15. Mookherjee, Dilip & Napel, Stefan, 2021. "Welfare rationales for conditionality of cash transfers," Journal of Development Economics, Elsevier, vol. 151(C).
    16. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476, Elsevier.
    17. John Hassler & José Rodríguez Mora & Joseph Zeira, 2007. "Inequality and mobility," Journal of Economic Growth, Springer, vol. 12(3), pages 235-259, September.
    18. Marcello D’Amato & Christian Pietro, 2014. "Occupational mobility and wealth evolution in a model of educational investment with credit market imperfections," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(1), pages 73-98, March.
    19. Vincenzo Lombardo, 2008. "Dual Economy Models: A Primer for…Growth, Income Distribution and Poverty Analysis," Working Papers 12_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    20. Donald S. Allen & Leonce Ndikumana, 1999. "Income inequality and minimum consumption: implications for growth," Working Papers 1999-013, Federal Reserve Bank of St. Louis.

    More about this item

    Keywords

    Endogenous inequality; human capital; occupational choice; education; Inégalité endogène; capital humain; choix professionnel; éducation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00196084. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.