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Human capital and income distribution dynamics

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  • Massimo Giannini

Abstract

The paper assumes a continuum of two period-lived agents; agents are identical except for inherited income. Young agents allocate their inheritance between consumption and investment in human capital under uncertainty. In the second period they receive a wage proportional to the accumulated human capital and invest in offspring. Two main results arise: a low earning per unit of human capital leads economy to converge to a stationary income distribution whatever the initial distribution. Viceversa, for a sufficiently high wage an endogenous growth operates and the distributive dynamics depends on initial conditions. In this case different redistributive policies are analyzed.

Suggested Citation

  • Massimo Giannini, 1999. "Human capital and income distribution dynamics," Working Papers in Public Economics 34, Department of Economics and Law, Sapienza University of Roma.
    • Handle: RePEc:sap:wpaper:wp34
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    References listed on IDEAS

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    More about this item

    Keywords

    human capital accumulation; personal income distribution; diffusion processes; Fokker-Planck.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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