Time Preference and the Distributions of Wealth and Income

Richard M. H. Suen

No 201004, Working Papers from University of California at Riverside, Department of Economics

Abstract: This paper presents a dynamic competitive equilibrium model with heterogeneous time pref- erences that can account for the observed patterns of wealth and income inequality in the United States. This model generalizes the standard neoclassical growth model by including (i) a demand for status by the consumers and (ii) human capital formation. The Örst feature prevents the wealth distribution from collapsing into a degenerate distribution. The second feature generates a strong positive correlation between earnings and wealth across agents. A calibrated version of this model succeeds in replicating the wealth and income distributions of the United States.Length: 38 pages

Keywords: Inequality; Heterogeneity; Time Preference; Human Capital (search for similar items in EconPapers)
JEL-codes: D31 E21 O15 (search for similar items in EconPapers)
Date: 2010-02, Revised 2010-02
New Economics Papers: this item is included in nep-dge and nep-hrm
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https://economics.ucr.edu/repec/ucr/wpaper/10-04.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: TIME PREFERENCE AND THE DISTRIBUTIONS OF WEALTH AND INCOME (2014)
Working Paper: Time Preference and the Distribution of Wealth and Income (2012)
Working Paper: Time Preference and the Distributions of Wealth and Income (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ucr:wpaper:201004

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