Inequalities and Patience for Tomorrow

Kazumichi Iwasa and Laixun Zhao

No 847, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper examines how impatience interacts with inequalities in economic development. In a society of intrinsic inequality, we show that (i) poor households tend to benefit more from positive shocks under decreasing marginal impatience (DMI) than uner constant marginal impatience (CMI) and increasing marginal impatience (IMI); (ii) an unequal society may be preferable for poor households under DMI; (iii) urbanization can increase the income inequality, while raising overall welfare; (iv) under DMI even if all households are allowed to own assets, with different initial asset holdings, the economy will not converge to the steady state where everybody is a capitalist.

Pages: 28pages
Date: 2013-02
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Working Paper: Inequalities and Patience for Tomorrow (2013)
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