Risky Human Capital Investment, Income Distribution, and Macroeconomic Dynamics

Volker Grossmann

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: This paper demonstrates that the role of the personal income distribution for an economy's process of development through risky human capital accumulation critically depends on the shape of the saving function. Empirical evidence for the U.S. strongly suggests that the marginal propensity to save is increasing in income, a property which so far has not been allowed for in the literature on human capital, income distribution and macroeconomics. Doing so, the present analysis suggests that the impact of higher inequality on the aggregate human capital stock, and thus, on growth is positive under rather weak conditions. Results heavily rely on a positive impact of parents. income on children's human capital investments, which holds under standard assumptions on labor income risk and risk aversion in the model, and is largely supported by empirical evidence.

Keywords: Growth; Income Distribution; Intergenerational Transfers; Risky Education; Saving Function. (search for similar items in EconPapers)
JEL-codes: I20 O11 O40 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://degit.sam.sdu.dk/papers/degit_09/C009_028.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to degit.sam.sdu.dk:80 (No such host is known. )

Related works:
Journal Article: Risky human capital investment, income distribution, and macroeconomic dynamics (2008)
Working Paper: Risky Human Capital Investment, Income Distribution, and Macroeconomic Dynamics (2003)
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:deg:conpap:c009_028

Access Statistics for this paper

More papers in DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade Contact information at EDIRC.
Bibliographic data for series maintained by Jan Pedersen ().