Persistent Inequality: An Explanation Based on Limited Parental Altruism

Mausumi Das ()

No 101, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: This paper provides an explanation for the observed persistence in income inequality across households in terms limited parental altruism. We postulate that the degree of parental altruism is 'limited' by the financial status of the parent. A poor parent not only has less ability, but also has less concern about children's welfare. This generates a non-linearity in the human capital formation for poor vis-à-vis rich households. With a constant returns to scale technology for human capital formation it implies that initial income differences may perpetuate over time. We also derive the conclusion that the initial distribution of income is important for long run growth - a conclusion that conforms to some of the recent works in this field, notably that of Galor and Zeira.

Keywords: Income distribution; human capital; intergenerational mobility; growth (search for similar items in EconPapers)
JEL-codes: D31 O40 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-06
New Economics Papers: this item is included in nep-dev
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Related works:
Working Paper: Persistent Inequality: An Explanation Based on Limited Parental Altruism (2008)
Journal Article: Persistent inequality: An explanation based on limited parental altruism (2007)
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