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Unemployment and Inheritance Linkage: A Dynamic General Equilibrium Analysis
, Sattwik Santra
Published in
2009
Pages: 1 - 38
Abstract

This general equilibrium model seeks to find an explicit relationship between inheritance (and hence, the long run wealth distribution) and the unemployment, generated due to search-friction in the labor market. The existence of unemployment in the equilibrium is guaranteed together with a perfect and an imperfect labor market. The model displays that inheritance affects unemployment positively in micro-level. Amongst the different countries as a whole, a negative relationship between income and unemployment is established. The model ensures that a dynasty does not get stagnated in a particular income class. By simulating the model, we isolate the initial income distribution from the long run income path and question the efficacy of the celebrated trap theory.

About the journal
JournalMunich Personal RePEc Archive
Open AccessYes