Play for the Rich and Work for the Poor? The Optimal Distribution of Saving and Work in the Heterogeneous Agents Neoclassical G

Martin Wolf and Akshay Shanker

No 16479, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In an economy with un-insurable idiosyncratic labor income risk, how should saving and work hours be distributed across income and wealth? To answer this question, we study a planner who cannot complete asset markets, but dictates how much individuals must work and save. With a U.S. calibration, the planner raises total savings but not hours, driving up aggregate wages which re-distributes income toward the consumption-poor. Across the distribution, the productive (high wage earners) should save more; the wealthy should work more; the poor should keep their work hours unchanged and take advantage of the indirect transfers from higher wages.

Keywords: Constrained efficiency; Incomplete markets; Pecuniary externality; Endogenous labor supply (search for similar items in EconPapers)
JEL-codes: D31 D52 E21 E24 J22 (search for similar items in EconPapers)
Date: 2021-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16479 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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:cpr:ceprdp:16479

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16479

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().