TY - JOUR
T1 - Inequality and markets
T2 - Some implications of occupational diversity
AU - Mookherjee, Dilip
AU - Ray, Debraj
PY - 2010/11/1
Y1 - 2010/11/1
N2 - This paper studies income distribution in an economy with borrowing constraints. Parents leave both financial and educational bequests; these determine the occupational choices of children. Occupational returns are determined by market conditions. If the span of occupational investments is large, long-run wealth distributions display persistent inequality. With a "rich" set of occupations, so that training costs form an interval, the distribution is unique and the average return to education must rise with educational investment. This finding contrasts with the usual presumption of diminishing returns to human capital. It is the central testable proposition of this paper. (JEL D14, D31, J24).
AB - This paper studies income distribution in an economy with borrowing constraints. Parents leave both financial and educational bequests; these determine the occupational choices of children. Occupational returns are determined by market conditions. If the span of occupational investments is large, long-run wealth distributions display persistent inequality. With a "rich" set of occupations, so that training costs form an interval, the distribution is unique and the average return to education must rise with educational investment. This finding contrasts with the usual presumption of diminishing returns to human capital. It is the central testable proposition of this paper. (JEL D14, D31, J24).
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U2 - 10.1257/mic.2.4.38
DO - 10.1257/mic.2.4.38
M3 - Article
AN - SCOPUS:85017116791
SN - 1945-7669
VL - 2
SP - 38
EP - 76
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 4
ER -