• search hit 3 of 5
Back to Result List

Credit Constraints, Idiosyncratic Risks, and Wealth Distribution in a Heterogeneous Agent Model

  • This paper examines the effects of credit market imperfections and idiosyncratic risks on occupational choice, capital accumulation, as well as on the income and wealth distribution in a two sector heterogeneous agent general equilibrium model. Workers and firm owners are subject to idiosyncratic shocks. Entrepreneurship is the riskier occupation. Compared to an economy with perfect capital markets, we find for the case of serially correlated shocks that more individuals choose the entrepreneurial profession in the presence of credit constraints, and that the fluctuation between occupations increases too. Workers and entrepreneurs with high individual productivity tend to remain in their present occupation, whereas low productivity individuals are more likely to switch between professions. Interestingly, these results reverse if we assume iid shocks, thus indicating that the nature of the underlying shocks plays an important role for the general equilibrium effects. In general, the likelihood of entrepreneurship increases with individual wealth.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Metadaten
Author:Christiane Clemens, Maik Heinemann
URL: https://pub-data.leuphana.de/frontdoor/index/index/docId/468
Document Type:Report
Language:English
Year of Completion:2007
Date of Publication (online):2007/04/02
Release Date:2007/04/02
Tag:DSGE model; credit constraints; occupational choice; wealth distribution
GND Keyword:Einkommensverteilung; Kreditkontrolle; Berufswahl
Institutes:Universität / Frühere Fachbereiche
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft