Social Mobility: The Barro-Becker Children Meet the Laitner-Loury Dynasties
Review of Economic Dynamics, 1999, vol. 2, issue 1, 65-103
I compare the predictions of two types of dynastic models for the persistence of wealth across generations: models that focus on uninsurable risk and intergenerational consumption smoothing but abstract from the fertility decision, such as Loury  and Laitner , and models without risk that focus on the fertility decision, such as Becker and Barro . I show that when both uninsurable risk and fertility decisions are present, a striking result obtains: wealthier parents have more children, but the transfer to each child is independent of wealth. Since this result is counterfactual, I also discuss extensions that can resurrect persistence. (Copyright: Elsevier)
Keywords: fertility; intergenerational transfers; bequest; persistence; dynamic programming (search for similar items in EconPapers)
JEL-codes: C61 D31 D1 J13 (search for similar items in EconPapers)
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