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On the Distribution of Wealth and Intergenerational Transfers

Yannis M. Ioannides and Ryuzo Sato
Journal of Labor Economics
Vol. 5, No. 3 (Jul., 1987), pp. 366-385
Stable URL: http://www.jstor.org/stable/2535026
Page Count: 20
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On the Distribution of Wealth and Intergenerational Transfers
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Abstract

We develop a simple behavioral model of intergenerational transfers, with individuals being subject to uncertainty about their children's incomes. Individuals differ with respect to innate ability and to wealth transfers they receive at birth. The distributions of total wealth, of total income, and of their components are uniquely determined from the equilibrium distribution of intergenerational transfers, for which existence and uniqueness are proven. For a particular utility function and provided that earned income follows a stable law, we show that so do all endogenous distributions. Intergenerational transfers are relatively more equally distributed than earnings, capital income, and lifetime wealth.

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