Working Paper: NBER ID: w14128
Authors: Jess Benhabib; Shenghao Zhu
Abstract: We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of inheritance, age and stochastic rates of capital return to wealth inequality, in particular to the Gini coefficient. We investigate the role of the fiscal and redistributive policies for wealth inequality and social welfare.
Keywords: No keywords provided
JEL Codes: E21; E25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| stochastic rate of return (G17) | wealth inequality (D31) |
| age (J14) | wealth inequality (D31) |
| bequests (D64) | wealth inequality (D31) |
| government redistributive policies (H23) | wealth inequality (D31) |
| government redistributive policies (H23) | social welfare (I38) |
| wealth inequality (D31) | social welfare (I38) |