Human Capital and Income Distribution Dynamics

Massimo Giannini
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Massimo Giannini: University of Rome "Tor Vergata"

GE, Growth, Math methods from EconWPA

Abstract: 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.

Keywords: Human; Capital; Accumulation; Personal; Income; Distribution; Diffusion; Processes (search for similar items in EconPapers)
JEL-codes: D31 D90 O15 O41 (search for similar items in EconPapers)
Date: 1998-02-26
Note: Type of Document - PDF; prepared on IBM PC -; to print on HP;
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpge:9802004

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