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Endogenous Social Networks and Inequality in an Intergenerational Setting

The paper explores the consequences for inequality of the joint evolution, endogenous or exogenous, of social connections and human capital investments. It allows for intergenerational transfers of both human capital and social networking endowments in dynamic and steady-state settings of a dynastic overlapping-generations model. Intergenerational transfer elasticities exhibit rich dependence on social effects. The dynamics of demographically increasingly complex models are shown to be tractable. The stochastic steady states of the human capital distribution are examined in the presence of shocks to underlying parameters that are interpreted as shocks to cognitive and non-cognitive skills.

Authors: 
Yannis Ioannides, Tufts University
Publication Date: 
August, 2015
Publication Status: 
Document Number: 
2015-012
File Description: 
Revised version, May, 2016