Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/163176
Authors: 
Iwasa, Kazumichi
Zhao, Laixun
Year of Publication: 
2017
Series/Report no.: 
ADBI Working Paper Series 677
Abstract: 
This paper examines how impatience interacts with inequalities in economic development. We consider two distinct groups of households (i.e., with intrinsic inequality), and show that (i) under decreasing marginal impatience (DMI), an unequal society may be preferable for poor households; (ii) poor households tend to benefit more from positive shocks under DMI than constant marginal impatience; (iii) inequality exhibits a sharp inverted-U shape as more people become rich, which should be good news for developing countries in catching up; and (iv) a tax on capital income reduces poor households' income when the fraction of the rich is sufficiently small. We also extend the basic model to examine the effects of immigration into rich countries.
Subjects: 
People's Republic of China
India
inequality
catching up
marginal impatience
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/igo/
Document Type: 
Working Paper

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