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Unemployment and Inheritance Linkage: A Dynamic General Equilibrium Analysis

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  • Mazumder, Debojyoti
  • Santra, Sattwik

Abstract

This general equilibrium model seeks to find an explicit relationship between inheritance (and hence, the long run wealth distribution) and the unemployment, generated due to search-friction in the labor market. The existence of unemployment in the equilibrium is guaranteed together with a perfect and an imperfect labor market. The model displays that inheritance affects unemployment positively in micro-level. Amongst the different countries as a whole, a negative relationship between income and unemployment is established. The model ensures that a dynasty does not get stagnated in a particular income class. By simulating the model, we isolate the initial income distribution from the long run income path and question the efficacy of the celebrated trap theory.

Suggested Citation

  • Mazumder, Debojyoti & Santra, Sattwik, 2009. "Unemployment and Inheritance Linkage: A Dynamic General Equilibrium Analysis," MPRA Paper 57161, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57161
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Status conscious preference; Inheritance; Search and matching; Income distribution;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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