Intergenerational Earnings Mobility, Inequality, and Growth
Journal of Monetary Economics
Posted: 10 Mar 1998
We study inequality, intergenerational mobility, and returns to education in a general-equilibrium model. Individuals earn wages depending on their education and their innate abilities. Education is purchased with transfers received from parents, while ability is a random variable which is independent across generations. The model generates multiple, history-dependent steady states. One steady state features low mobility, high inequality, and a low average level of education. The other has the opposite characteristics and also features a more efficient distribution of education.
JEL Classification: O40, J62, J31
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