We provide a theory to explain the existence of inequality in an economy where agents have identical preferences and have access to the same production technology. Agents consume a "utility" good and a "health" good which determines their subjective discount factor. Depending on initial...

Purpose – The purpose of this paper is to provide a theory that can explain the persistence of inequality in an economy where household agents are identical in terms of their preferences and have access to the same production technology. Design/methodology/approach – An overlapping...