Comparing inequality and mobility in linear models

Baochun Peng

Economics Letters, 2018, vol. 168, issue C, 155-157

Abstract: This note shows that income risk and capital risk affect mobility and inequality asymmetrically in the linear model analysed by Zhu (2013). Inequality responds to changes in both income risk and capital risk, while mobility responds to changes in capital risk and may not respond to changes in income risk. Consequently, income tax reduces wealth inequality without affecting wealth mobility, while tax on capital returns reduces wealth inequality and increases wealth mobility.

Keywords: Equality of opportunity; Inequality; Mobility; Wealth; Income (search for similar items in EconPapers)
JEL-codes: D31 D63 J62 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:168:y:2018:i:c:p:155-157

DOI: 10.1016/j.econlet.2018.04.014

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