Patience Capital and the Demise of the Aristocracy

69 Pages Posted: 8 Aug 2005

See all articles by Matthias Doepke

Matthias Doepke

Northwestern University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Date Written: June 2005

Abstract

We model the decision problem of a parent who chooses an occupation and invests in the patience of her children. The two choices complement each other: patient individuals choose occupations with a steep income profile; a steep income profile, in turn, leads to a strong incentive to invest in patience. In equilibrium, society becomes stratified along occupational lines. The most patient people are those in occupations requiring the most education and experience. The theory can account for the demise of the British land-owning aristocracy in the nineteenth century, when rich landowners proved unable to profit from new opportunities arising with industrialization, and were thus surpassed by industrialists rising from the middle classes.

Keywords: Discount factor, patience, British aristocracy, industrial revolution, capital accumulation, income distribution

JEL Classification: N23, O14, O15, Z10

Suggested Citation

Doepke, Matthias and Zilibotti, Fabrizio, Patience Capital and the Demise of the Aristocracy (June 2005). CEPR Discussion Paper No. 5106, Available at SSRN: https://ssrn.com/abstract=779287

Matthias Doepke (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Fabrizio Zilibotti

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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