An adjustment cost model of social mobility
| Autor: | Yoseph Yilma Getachew, Parantap Basu |
|---|---|
| Rok vydání: | 2015 |
| Předmět: |
Adjustment cost of capital
Economics and Econometrics Labour economics Weighted average cost of capital Economic capital Capital Consumption Allowance Intergenerational mobility Physical capital Marginal cost of capital schedule Cost of capital Capital deepening Economics Capital intensity Inequality persistence health care economics and organizations |
| Zdroj: | Journal of macroeconomics, 2015, Vol.44, pp.177-190 [Peer Reviewed Journal] |
| ISSN: | 0164-0704 |
| DOI: | 10.1016/j.jmacro.2015.02.008 |
| Popis: | We analyze herein the effects of the human capital adjustment cost on social mobility. Such an adjustment cost is modeled as a rising marginal cost schedule for augmenting human capital. We use a general human capital technology, which disentangles the adjustment cost from the depreciation cost of the human capital. Missing credit markets prevent individuals from equalizing the initial differences in the human capital. We find that a higher adjustment cost for human capital acquisition slows down the social mobility and results in a persistent inequality across generations. On the other hand, a higher rate of human capital depreciation could increase mobility via a positive effect on new investment. The quantitative analysis of our model suggests that the human capital adjustment cost is nontrivial to account for the observed persistence of inequality and social mobility. In addition, we find that the government redistribution policy could account for the large observed variation in estimates of social mobility. |
| Databáze: | OpenAIRE |
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