Age, Luck, and Inheritance

Jess Benhabib () and Shenghao Zhu

No 14128, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of inheritance, age and stochastic rates of capital return to wealth inequality, in particular to the Gini coefficient. We investigate the role of the fiscal and redistributive policies for wealth inequality and social welfare.

JEL-codes: E21 E25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-hap and nep-mac
Date: 2008-06
Note: EFG
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