A note on income risks and their implications for wealth concentration

Mohsen Mohaghegh ()
Additional contact information
Mohsen Mohaghegh: Indian Institute of Management Ahmedabad

Economics Bulletin, 2025, vol. 45, issue 1, 564 - 576

Abstract: Income risks are not accurately captured by standard AR processes that are common in the literature. This paper proposes a simple stochastic process which matches several moments in the data including the cross-sectional distribution of income and the distribution income risk, and can be easily used in models with uninsurable income risk. Incorporating this process into an off-the-shelf OLG model leads to a rise in wealth concentration narrowing the gap between traditional models and the data. However, the right tail of the wealth distribution remains significantly thinner than the data.

Keywords: Incomplete Markets; Earning Risks; Precautionary Savings; Wealth Concentration (search for similar items in EconPapers)
JEL-codes: C6 D3 (search for similar items in EconPapers)
Date: 2025-03-30
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2025/Volume45/EB-25-V45-I1-P50.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-24-00333

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().