Year: 2000
Type: article
Abstract: This dissertation examines the household side of the economy in order to analyze: (i) the degree to which the saving behavior of households is affected by the opportunity to start or own a business and its implications for the distribution of wealth; and (ii) the relationship between the extent of entrepreneurship in the economy and socio-economic mobility, i.e., the movement of families across wealth brackets over time. First, a number of stylized facts based on PSID data are outlined. They show relevant differences in asset holdings and wealth mobility between "entrepreneurs"--economic agents that own a business in the data--and "workers". Second, a dynamic general equilibrium model of income and wealth distribution with an explicit entrepreneurial choice is developed. The model is calibrated to match the key features of the data, and it is then used to obtain an estimate of the quantitative importance for capital accumulation and wealth concentration of households that undertake entrepreneurial activities, via their different microeconomic behavior. Through the modeling of the entrepreneurial activities, the model economy generates a stationary distribution of wealth with a degree of concentration that accounts for most of the inequality observed in the U.S. economy. The model is also successful in replicating the main patterns of socio-economic mobility with entrepreneurs experiencing higher upward mobility than workers.
Source: Review of Economic Dynamics
Author: Vincenzo Quadrini
Institution: Duke University
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2142527263