Income Inequality in a Job-Search Model with Heterogeneous Time Preferences
39 Pages Posted: 5 Feb 2014
Date Written: March 25, 2004
Abstract
This paper explores the use of an intertemporal job-search model in the investigation of within-cohort and between-cohort income inequality, the latter being generated by the heterogeneity of time preferences among cohorts of homogenous workers and the former by the cross-sectional turnover in the job market. It also offers an alternative explanation for the empirically-documented negative correlation between time preference and labor income. Under some specific distributions regarding wage offers and time preferences, we show how the within-cohort and between-cohort Gini coefficients of income distribution can be calculated, and how they vary as a function of the parameters of the model.
Keywords: within-cohort, between-cohort, Labor, Gini coefficients
JEL Classification: E0, C0
Suggested Citation: Suggested Citation