We study the forces driving polarization and higher wage inequality since 1980 using a structural model of occupation choice in the tradition of Roy (1951). In our model, changes in relative occupational skill prices proxy for changes in relative demand for occupational labor services. Our...

In this paper, I present some popular measures of mobility in economic outcomes within a family across generations. I also discuss two of the most important factors preventing intergenerational mobility: existence of financially constrained individuals and transmission of tastes from parents to...

We consider an economy where individuals use their standard of living based on past consumption in order to evaluate the utility arising from current consumption. We analyse how this process of preference formation affects the bequest motive. We show that habits (based on one's own past...

We analyze the welfare properties of the equilibrium path of a growth model where both habits and consumption externalities affect the utility of consumers. Our analysis highlights the crucial role played by complementarities between externalities and habits in order to generate an inefficient...

. The complexity of both tax code provisions and tax forms could induce taxpayers to commit errors when they fill their income reports. The existence of these involuntary mistakes affects the tax enforcement policy as tax auditors will face now two sources of uncertainty, namely, the typical one...

In this paper, we analyze how the introduction of habits and aspirations affects the distribution of wealth when individuals’ labor productivity is subject to idiosyncratic shocks and bequests arise from a joy-of-giving motive. In the presence of either bequests or aspirations, labor income...

We analyze the transitional dynamics of an endogenous growth model with heterogeneous consumption goods. In this model, convergence is driven by two different forces: the diminishing returns to capital and the growth of the relative price between physical and human capital. Because this second...

In this paper we propose the infimum of the Arrow-Pratt index of absolute risk aversion as a measure of global risk aversion of a utility function. We show that, for any given arbitrary pair of distributions, there exists a threshold level of global risk aversion such that all increasing...

We analyze how the introduction of habits and aspirations affects the distribution of wealth when the labor productivity of individuals is subject to idiosyncratic shocks and when bequests arise from a joy-of-giving motive. In the presence of either bequests or aspirations, labor income shocks...