exhaustible resource allocation in an overlapping generations economy abstract this paper analyzes competitive allocations of an exhaustible resource in an overlapping generations economy conditions are given for the existence of equilibrium extraction rules such that both extraction and investment in future stocks are increasing and continuous in the current stock the paper then considers the time paths of equilibrium allocations and shows that there are economies where equilibrium resource extractions and prices exhibit nonclassical behavior this is illustrated through a finite horizon example in which extractions increase and prices decrease over the entire time horizon and an infinite horizon example where there are persistent cycles in extractions and prices and multiple equilibria the paper concludes by examining welfare issues

intergenerational earnings mobility in post soviet russia we make use of longitudinal data for the russian economy over 1994 2016 to obtain earnings information about parents and children we show that rank correlations give reliable estimates and find intergenerational correlations for sons and daughters that are comparable to those found in the usa and the uk sons earn more than daughters conditional on education and parents rank observable household characteristics and unobservables contribute about the same to the correlations both more than education

cooperation in ongoing organizations this paper argues that overlapping games can provide a natural theory of long lived organizations it shows that participation in organizations of infinite duration changes the incentives of agents with finite lives and will induce more cooperation than a static model would predict after developing the general theory we apply it to the description of career paths in organizations and show that it can be optimal to give the youngest workers the most arduous tasks

educational inequality and intergenerational mobility in latin america a new database abstract the causes and consequences of the intergenerational persistence of inequality are a topic of great interest among various fields in economics however until now issues of data availability have restricted a broader and cross national perspective on the topic based on rich sets of harmonized household survey data we contribute to filling this gap by computing time series for several indexes of relative and absolute intergenerational education mobility for 18 latin american countries over 50 years and making them publicly available we find that intergenerational mobility is on average rising in latin america this pattern seems to be driven by the high upward mobility of children from low educated families at the same time there is substantial immobility at the top of the distribution significant cross country differences are observed and are associated with income inequality poverty economic growth public educational expenditures and assortative mating

the rise and decline of general laws of capitalism economists have long been drawn to the ambitious quest of discovering the general laws of capitalism david ricardo for example predicted that capital accumulation would terminate in economic stagnation and inequality as a greater and greater share of national income accrued to landowners karl marx followed him by forecasting the inevitable immiseration of the proletariat thomas piketty s 2014 tome capital in the twenty first century emulates marx in his title his style of exposition and his critique of the capitalist system piketty is after general laws that will demystify our modern economy and elucidate the inherent problems of the system and point to solutions but the quest for general laws of capitalism is misguided because it ignores the key forces shaping how an economy functions the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from various different economic arrangements are distributed despite his erudition ambition and creativity marx was led astray because of his disregard of these forces the same is true of piketty s sweeping account of inequality in capitalist economies in the next section we review marx s conceptualization of capitalism and some of his general laws we then turn to piketty s approach to capitalism and his general laws we will point to various problems in piketty s interpretation of the economic relationships underpinning inequality but the most important shortcoming is that

trends in intergenerational income mobility previous studies of recent u s trends in intergenerational income mobility have produced widely varying results partly because of large sampling errors by making more efficient use of the available information in the panel study of income dynamics we generate more reliable estimates of the recent time series variation in intergenerational mobility our results which pertain to the cohorts born between 1952 and 1975 do not reveal major changes in intergenerational mobility

on intergenerational immobility evidence that adult credit health reflects the childhood environment we examine the persistence of inequality through credit health linking administrative records from several sources we document that childhood circumstances are strongly predictive of financial fragility in adulthood with credit scores among those from disadvantaged backgrounds nearly 100 points lower and 20 percentage points more likely to qualify as subprime we find evidence this relationship reflects differences in human capital and debt management still neither appears to fully explain the relationship our results reveal another dimension along which childhood circumstances persist into adulthood and could mean the many settings that evaluate individuals based on their credit health help reinforce inequities jel d12 e24 i32

social contracts as assets a possible solution to the time consistency problem this paper presents a new solution to the time consistency problem that appears capable of enforcing ex ante policy in a variety of settings in which other enforcement mechanisms do not work the solution involves formulating a social contract institution or agreement that specifies the optimal ex ante policy the social contract is effectively sold by succesive old generations to successive young generations who pay for the social contract through the payment of taxes both old and young generations have an economic incentive to fulfill the social contract for the old generation breaking the social contract makes the social contract valueless and the generation suffers a capital loss by not being able to sell it for the young generation the economic advantage of purchasing the existing social contract exceeds its price as well as the economic gain from setting up the a new social contract

biases in standard measures of intergenerational income dependence abstract estimates of the most common mobility measure the intergenerational elasticity can be severely biased if snapshots are used to approximate lifetime income however little is known about biases in other popular dependence measures using long swedish income series we provide such evidence for log linear and rank correlations and rank based transition probabilities attenuation bias is considerably weaker in rank based measures life cycle bias is strongest in the elasticity moderate in log linear correlations and small in rank based measures however there are important exceptions persistence in the tails of the distribution is considerably higher and long distance downward mobility lower than estimates from short run income suggest

is the united states still a land of opportunity recent trends in intergenerational mobility abstract we present new evidence on trends in intergenerational mobility in the united states using administrative earnings records we find that percentile rank based measures of intergenerational mobility have remained extremely stable for the 1971 1993 birth cohorts for children born between 1971 and 1986 we measure intergenerational mobility based on the correlation between parent and child income percentile ranks for more recent cohorts we measure mobility as the correlation between a child s probability of attending college and her parents income rank we also calculate transition probabilities such as a child s chances of reaching the top quintile of the income distribution starting from the bottom quintile based on all of these measures we find that children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s however because inequality has risen the consequences of the birth lottery t

education policy and intergenerational transfers in equilibrium this paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation we build an overlapping generations life cycle heterogeneous agent incomplete markets model with education labor supply and consumption saving decisions altruistic parents make inter vivos transfers to their children labor supply during college government grants and loans as well as private loans complement parental transfers as sources of funding for college education we find that the current financial aid system in the u s improves welfare and removing it would reduce gdp by two percentage points in the long run any further relaxation of government sponsored loan limits would have no salient effects the short run partial equilibrium effects of expanding tuition grants especially their need based component are sizeable however long run general equilibrium effects are 3 4 times smaller every additional dollar of government grants crowds out 20 30 cents of parental transfers

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

economic development urban underemployment and income inequality the evolution of income inequality during the course of economic development is investigated the source of inequality is market luck in obtaining employment in the protected urban formal sector versus employment in the unprotected urban informal sector it is shown that with development inequality tends to follow an inverted u it rises when urbanization is low and consequent pressure on the land keeps rural incomes low making agents willing to incur high risks of underemployment in the urban informal sector it eventually falls after urbanization and consequently rural incomes have increased sufficiently to allow agents to make better than even bets in the urban industrial sector

measuring inequality change in an economy with income growth abstract this paper reassesses an article by fields which criticizes using standard income inequality indices for the evaluation of high income sector enlargement growth this paper dissents in three ways the intuition that motivated fields paper is found to only partially account for the changes occurring during growth the inequality index that fields developed is shown to incorporate the concept of symmetry and the concept of inequality as the expected experience of income differences is shown to support the use of the standard indices

tradition and common property management since management of a common property resource can be undertaken only by a government of finitely lived agents studying the behaviour of such governments is a natural way to study common property management i propose that we regard the choice of management objective by such a government as a move in a game of sequential agents given this framework it is shown that subgame perfect equilibria exist in which successive governments choose the same traditional management objective these strategies enable an economy to overcome any intergenerational externality thus following a tradition of conservation may be a rational response to an intergenerational externality tradition et gestion d une ressource en propriete commune puisque la gestion d une

positional deprivation and support for radical right and radical left parties we explore how support for radical parties of both the left and right may be shaped by what we call positional deprivation where growth in income of individuals at a given point in the income distribution is outpaced by income growth elsewhere in that distribution we argue that positional deprivation captures the combination of over time and relative misfortune that can be expected to distinctly spur support for radical left and right parties we explore this possibility by matching new measures of positional deprivation to individual level survey data on party preferences in 20 european countries from 2002 to 2014 we find that positional deprivation is robustly correlated with supporting radical populist parties first positional deprivation generally measured as average income growth across deciles of a country s income distribution minus a respondent s own decile s growth is associated with respondents retreat from mainstream parties and with support for both radical right and particularly radical left parties second positional deprivation relative to the highest and the lowest ends of the income spectrum play out differently for radical right and for radical left support a respondent s positional deprivation relative to the wealthiest decile s growth in his or her country tends to spur support for radical left but not radical right parties in contrast positional deprivation relative to the poorest decile s growth in a respondent s country tends to spur support for radical right but not left parties the results suggest that the combination of over time and relative economic misfortune may be key to how economic experience shapes radical backlash of the left and right

equalization or selection reassessing the meritocratic power of a college degree in intergenerational income mobility intergenerational mobility is higher among college graduates than among people with lower levels of education in light of this finding researchers have characterized a college degree as a great e

repeated games played by overlapping generations of players the present paper tries to explain cooperative behaviour in an organization run by a sequence of long but finitely lived agents we show that the folk theorem holds for infinitely repeated games with overlapping generations of finitely lived players any mutually beneficial outcome can approximately be sustained if the player s life span and the overlapping periods are long enough the result is stronger than the usual folk theorems in that it employs no assumption on the stage game such as the full dimensionality of payoff set or multiplicity of equilibria

measuring inequality change in an economy with income growth abstract this paper analyzes how to measure changes in inequality in an economy with income growth the discussion distinguishes three stylized kinds of economic growth 1 1 high income sector enrichment 2 2 low income sector enrichment 3 3 high income sector enlargement in which the high income sector expands and absorbs persons from the low income sector th e two enrichment types pose no problem for assessing inequality change in the course of economic growth for high income sector enrichment growth inequality might reasonably be said to increase whereas for low income sector enrichment inequality might be said to decrease these adjustments are non controversial and non problematical where problems arise is in the case of high income sector enlargement growth in that case the two alternative approaches have been shown in this paper to yield markedly results 1 1 the traditional inequality indices generate an inverted u pattern of inequality that is inequality rises in the early stages of high income sector enlargement growth and falls thereafter 2 2 the new approach suggested here based on axioms of gap inequality and numerical inequality generates a u pattern of inequality that is inequality falls in the early stages of high income sector enlargement growth and rises thereafter the discrepancy between the familiar indices and the alternative approach based on axioms of gap inequality and numerical inequality bears further scrutiny two courses of action are possible one might try to axiomatize inequality in ways that generate an inverted u pattern in high income sector enlargement growth thereby rationalizing the continued use of the usual inequality indices with the inverted u property alternatively one might retain the axioms proposed here embed them into a more formal structure and construct a family of inequality indices consistent with them others might wish to pursue the first course i am at work on the second

income inequality mobility and turnover at the top in the us 1987 2010 abstract while cross sectional data show increasing income inequality in the united states it is also important to examine how incomes change over time using income tax data this paper provides new evidence on long term and intergenerational mobility and persistence at the top of the income distribution half of those aged 35 40 in the top or bottom quintile in 1987 remain there in 2007 the others have moved up or down while 30 percent of dependents aged 15 18 from bottom quintile households are themselves in the bottom quintile after 20 years most have moved up persistence is lower in the highest income groups

gender gaps in the effects of childhood family environment do they persist into adulthood we examine the differential effects of family disadvantage on the education and adult labor market outcomes of men and women using high quality administrative data on the entire population of denmark born between 1966 and 1995 we link parental education and family structure during childhood to male female and brother sister differences in adolescent outcomes educational attainment and adult earnings and employment our results are consistent with u s findings that boys benefit more from an advantageous family environment than do girls in terms of grade school outcomes father s education which has not been examined in previous studies is particularly important for sons however we find a very different pattern of parental influence on adult outcomes gender gaps in educational attainment employment and earnings are increasing in maternal education benefiting daughters paternal education decreases the gender gaps in educational attainment favoring sons and labor market outcomes favoring daughters we conclude that differences in the behavior of school aged boys and girls may be poor proxies for differences in skills that drive longer term outcomes

parental altruism and common property regulation since any regulation of a common property resource must be selected and enforced by a government of finitely lived agents a natural way to study common property regulation is to study the behavior of these governments in this paper such behavior is analyzed in an overlapping generations economy where agents are altruistic towards their children