The paper assumes a continuum of two period-lived agents; agents are identical except for the inherited income. Young agents optimally allocate their inherited income between consumption and investment in human capital in a stochastic environment. In the second period they receive a wage proportional to the accumulated human capital and invest in offspring. Two main results are provided: a low earning per unit of human capital leads the economy to converge to a stationary income distribution whatever the initial distribution. Viceversa, for a sufficently high wage an endogenous growth is at work and the income distribution dynamics depends on the initial conditions. In this case several redistributive policies are analized.
Type of Document - PDF; prepared on IBM PC -; to print on HP;
Classification:
D31 - Personal Income, Wealth and Their Distributions ; D90 - Intertemporal Choice and Growth. General ; O15 - Human Resources; Income Distribution; Migration ; O41 - One, Two, and Multisector Growth Models