Opportunity and Inequality across Generations

Winfried Koeniger and Carlo Zanella

No 8099, CESifo Working Paper Series from CESifo

Abstract: We analyze how intergenerational mobility and inequality would change relative to the status quo if dynasties had access to optimal insurance against low ability of future generations. Based on a dynamic, dynastic Mirrleesian model, we find that insurance against intergenerational ability risk increases in the social optimum relative to the status quo. This implies less intergenerational mobility in terms of welfare but no quantitatively significant change in earnings mobility. Earnings mobility is thus similar across economies with different incentives and welfare, illustrating that changes in earnings mobility cannot be interpreted readily in welfare terms without further analysis.

Keywords: asymmetric information; intergenerational mobility; inequality; human capital; schooling; bequests (search for similar items in EconPapers)
JEL-codes: E24 H21 I24 J24 J62 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ore
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Related works:
Journal Article: Opportunity and inequality across generations (2022)
Working Paper: Opportunity and Inequality across Generations (2022)
Working Paper: Opportunity and Inequality across Generations (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8099

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