The distribution of wealth and redistributive policies∗
نویسندگان
چکیده
We study the dynamics of the distribution of wealth in an Overlapping Generation economy with bequest and various forms of redistributive taxation. We characterize the transitional dynamics of the wealth distribution and as well as the stationary distribution. We show that the stationary wealth distribution is a Pareto distribution. Wealth is less concentrated (the Gini coefficient is lower) for both higher capital income taxes and estate taxes, but the marginal effect of capital income taxes is much stronger than the effect of estate taxes. Finally, we characterize optimal redistributive taxes with respect to a utilitarian social welfare measure. Social welfare is maximized short of minimal wealth inequality and with zero estate taxes. ∗We gratefully acknowledge conversations with Alberto Bressan, Mariacristina De Nardi, Xavier Gabaix, Leslie Greengard, Frank Hoppensteadt, Gianluca Violante, and Ed Wolff. Thanks to Nicola Scalzo and Eleonora Patacchini for help with "impossible" Italian references. This paper is part of the Polarization and Conflict Project CIT-2-CT-2004-506084 funded by the European Commission-DG Research Sixth Framework Programme.
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