INCOME INEQUALITY IN A JOB-SEARCH MODEL WITH HETEROGENEOUS TIME PREFERENCES?

Rubens Penha Cysne ()

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: This paper investigates the income inequality generated by a job-search process when di¤erent cohorts of homogeneous workers are allowed to have di¤erent degrees of impatience. Using the fact the average wage under the invariant Markovian distribution is a decreasing function of the time preference (Cysne, 2004), I show that the Lorenz curve and the between-cohort Gini coe¢ cient of income inequality can be easily derived in this case. An example with arbitrary measures regarding the wage o¤ers and the distribution of time preferences among cohorts provides some quantitative insights into how much income inequality can be generated, and into how it varies as a function of the probability of unemployment and of the probability that the worker does not find a job offer each period.

JEL-codes: E40 D60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2004
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Working Paper: Income inequality in a job-search model with heterogeneous time preferences (2004)
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