How important is discount rate heterogeneity for wealth inequality?

Autor:	Lutz Hendricks
Rok vydání:	2007
Předmět:	Economics and Econometrics Control and Optimization Gini coefficient Inequality Earnings business.industry Applied Mathematics media_common.quotation_subject Distribution (economics) Preference heterogeneity Percentage point Econometrics Economics business Preference (economics) media_common
Zdroj:	Journal of Economic Dynamics and Control. 31:3042-3068
ISSN:	0165-1889
Popis:	This paper investigates the role of discount rate heterogeneity for wealth inequality. The key idea is to infer the distribution of preference parameters from the observed age profile of wealth inequality. The contribution of preference heterogeneity to wealth inequality can then be measured using a quantitative life-cycle model. I find that discount rate heterogeneity increases the Gini coefficient of wealth by around 0.07 to levels that are close to the data. The share of wealth held by the richest 1% of households rises by around 0.04, but falls short of the data by more than 10 percentage points. Discount rate heterogeneity also helps to account for the large wealth inequality observed among households with similar lifetime earnings.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::7496c397565e6c845638072573e6a5b6 https://doi.org/10.1016/j.jedc.2006.10.002 Zobrazit plný text záznamu Full Text from ScienceDirect