Hostname: page-component-745bb68f8f-f46jp Total loading time: 0 Render date: 2025-02-04T19:51:44.940Z Has data issue: false hasContentIssue false
  • English
  • Français

Heterogeneous bequests and social inequalities

Published online by Cambridge University Press:  03 February 2025

Kirill Borissov ,
Stefano Bosi ,
Thai Ha-Huy  and
Mikhail Pakhnin
Kirill Borissov
Affiliation:
Department of Economics, Non-government Educational Institution “European University at St. Petersburg”, St. Petersburg, Russia
Stefano Bosi
Affiliation:
EPEE, Université Paris-Saclay, Gif-sur-Yvette, Île-de-France, France
Thai Ha-Huy
Affiliation:
EPEE, Université Paris-Saclay, Gif-sur-Yvette, Île-de-France, France TIMAS, Thang Long University, Hoàng Mai, Vietnam
Mikhail Pakhnin*
Affiliation:
Department of Applied Economics, University of the Balearic Islands, Palma de Mallorca, Spain
*
Corresponding author: Mikhail Pakhnin; Email: m.pakhnin@uib.es
Get access Rights & Permissions [Opens in a new window]

Abstract

We study a growth model with two types of agents who are heterogeneous in their degree of family altruism. We prove that every equilibrium path of consumption, bequests, and capital converges to a unique steady state and study the effect of altruism on the properties of steady-state equilibrium. We show that aggregate income is positively related to both level of altruism and altruism heterogeneity. When altruism heterogeneity is low or moderate, income inequality follows an inverse U-shaped pattern relative to the level of altruism. These observations are consistent with the cross-country Kuznets curve linking different steady-state levels of income to steady-state levels of inequality. When altruism heterogeneity is high, income inequality decreases with the level of altruism. Our results suggest that heterogeneous altruism is a possible mechanism linking economic growth and income inequality.

Keywords

Economic growthinequalityaltruismbequestsD15D64E21O40
Type
Articles
Information
Macroeconomic Dynamics , Volume 29 , 2025 , e67
Copyright
© The Author(s), 2025. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Andreoni, J. (1989) Giving with impure altruism: applications to charity and ricardian equivalence. Journal of Political Economy 97(6), 1447–1458.CrossRefGoogle Scholar
Barro, R. J. (1974) Are government bonds net wealth? Journal of Political Economy 82(6), 1095–1117.CrossRefGoogle Scholar
Becker, R. A. (1980) On the long-run steady state in a simple dynamic model of equilibrium with heterogeneous households. Quarterly Journal of Economics 95(2), 375–382.CrossRefGoogle Scholar
Becker, R. A. and Mitra, T.. (2012) Efficient Ramsey equilibria. Macroeconomic Dynamics 16(S1), 18–32.CrossRefGoogle Scholar
Bernheim, B. D. and Ray, D.. (1987). Economic growth with intergenerational altruism. Review of Economic Studies 54, 227–243.CrossRefGoogle Scholar
Borissov, K. (2016) The rich and the poor in a simple model of growth and distribution. Macroeconomic Dynamics 20(7), 1934–1952.CrossRefGoogle Scholar
Borissov, K. and Kalk, A.. (2020) Public debt, positional concerns, and wealth inequality. Journal of Economic Behavior and Organization 170, 96–111.CrossRefGoogle Scholar
Borissov, K., Bosi, S., Ha-Huy, T. and Pakhnin, M.. (2023). Heterogeneous bequests and social inequalities. Working Paper HAL-04236588. Available at: https://hal.science/hal-04236588.Google Scholar
Bourguignon, F. (2018) World changes in inequality: an overview of facts, causes, consequences, and policies. CESifo Economic Studies 64(3), 345–370.CrossRefGoogle Scholar
Bourguignon, F. and Morrisson, C.. (1990) Income distribution, development and foreign trade: a cross-sectional analysis. European Economic Review 34(6), 1113–1132.CrossRefGoogle Scholar
Campano, F. and Salvatore, D.. (1988) Economic development, income inequality and Kuznets’ U-shaped hypothesis. Journal of Policy Modeling 10(2), 265–280.CrossRefGoogle Scholar
Das, M. (2007) Persistent inequality: an explanation based on limited parental altruism. Journal of Development Economics 84(1), 251–270.CrossRefGoogle Scholar
Falk, A., Becker, A., Dohmen, T., Enke, B., Huffman, D. and Sunde, U.. (2018) Global evidence on economic preferences. Quarterly Journal of Economics 133(4), 1645–1692.CrossRefGoogle Scholar
Franks, M., Klenert, D., Schultes, A., Lessmann, K. and Edenhofer, O.. (2018) Is capital back? The role of land ownership and savings behavior. International Tax and Public Finance 25(5), 1252–1276.CrossRefGoogle Scholar
Franks, M. and Edenhofer, O.. (2023) Optimal wealth taxation when wealth is more than just capital. FinanzArchiv: Public Finance Analysis 79(3), 175–207.CrossRefGoogle Scholar
Hatcher, M. and Pourpourides, P. M.. (2018) Parental altruism, missing credit markets and growth. Cardiff Economics Working Papers E2018/26, 1–48.Google Scholar
Hellier, J. and Lambrecht, S.. (2013) Inequality, Growth and Welfare: The Main Links. In: Hellier, J. and Chusseau, N.. (eds.), Growing Income Inequalities. Palgrave Macmillan, 274–311.CrossRefGoogle Scholar
Hendricks, L. (2001) Bequests and retirement wealth in the United States. Working Paper, Arizona State University, 1–11. Available at: https://lhendricks.org/Research/wps/bequdata_paper.pdf.Google Scholar
Hendricks, L. (2007) How important is discount rate heterogeneity for wealth inequality? Journal of Economic Dynamics and Control 31(9), 3042–3068.CrossRefGoogle Scholar
Jha, S. K. (1996) The Kuznets curve: a reassessment. World Development 24(4), 773–780.CrossRefGoogle Scholar
Kohlberg, E. (1976) A model of economic growth with altruism between generations. Journal of Economic Theory 13(1), 1–13.CrossRefGoogle Scholar
Krusell, P. and Smith, A. A.. (1998) Income and wealth heterogeneity in the macroeconomy. Journal of Political Economy 106(5), 867–896.CrossRefGoogle Scholar
Kuznets, S. (1955) Economic growth and income inequality. American Economic Review 45, 1–28.Google Scholar
Laitner, J. (2002) Wealth inequality and altruistic bequests. American Economic Review 92(2), 270–273.CrossRefGoogle Scholar
Lambrecht, S., Michel, P. and Thibault, E.. (2006) Capital accumulation and fiscal policy in an OLG model with family altruism. Journal of Public Economic Theory 8(3), 465–486.CrossRefGoogle Scholar
Leininger, W. (1986) The existence of perfect equilibria in a model of growth with altruism between generations. Review of Economic Studies 53(3), 349–367.CrossRefGoogle Scholar
Mankiw, N. G. (2000) The savers-spenders theory of fiscal policy. American Economic Review 90(2), 120–125.CrossRefGoogle Scholar
Michel, P. and Pestieau, P.. (1998) Fiscal policy in a growth model with both altruistic and nonaltruistic agents. Southern Economic Journal 64, 682–697.Google Scholar
Michel, P. and Pestieau, P.. (2005) Fiscal policy with agents differing in altruism and ability. Economica 72(285), 121–135.CrossRefGoogle Scholar
Milanovic, B. (2000) Determinants of Cross-Country Income Inequality: An “Augmented” Kuznets Hypothesis. In: Franicevic, V. and M. Uvalic (eds.), Equality, Participation, Transition. Palgrave Macmillan, 48–79.CrossRefGoogle Scholar
OECD. (2011). Society at a glance 2011 – OECD social indicators. Available at: https://www.oecd.org/social/societyataglance2011.htm.Google Scholar
Pakhnin, M. (2023) Collective choice with heterogeneous time preferences. Journal of Economic Surveys 37(3), 715–746.CrossRefGoogle Scholar
Palivos, T. (2005) Optimal monetary policy with heterogeneous agents: a case for inflation. Oxford Economic Papers 57(1), 34–50.CrossRefGoogle Scholar
Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge: Harvard University Press.CrossRefGoogle ScholarPubMed
Rapoport, H. and Vidal, J. P.. (2007) Economic growth and endogenous intergenerational altruism. Journal of Public Economics 91(7-8), 1231–1246.CrossRefGoogle Scholar
Ray, D. (1987) Nonpaternalistic intergenerational altruism. Journal of Economic Theory 41(1), 112–132.CrossRefGoogle Scholar
Reichlin, P. (2020) Social welfare, parental altruism, and inequality. Journal of Public Economic Theory 22(5), 1391–1419.CrossRefGoogle Scholar
Savvides, A. and Stengos, T.. (2000) Income inequality and economic development: evidence from the threshold regression model. Economics Letters 69(2), 207–212.CrossRefGoogle Scholar
Smetters, K. (1999) Ricardian equivalence: long-run Leviathan. Journal of Public Economics 73(3), 395–421.CrossRefGoogle Scholar
Zucman, G. (2019) Global wealth inequality. Annual Review of Economics 11(1), 109–138.CrossRefGoogle Scholar