Human Capital Accumulation and Transition to Skilled Employment

Angelopoulos, Konstantinos; Malley, Jim; Philippopoulos, Apostolis

doi:10.1086/690445

Cited by 14 publications

(17 citation statements)

References 49 publications

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“…Each Rich household in any given period t, chooses c R;t ; e R;t , l R;t ; k R;t+1 ,b R;t+1 , h R;t+1 to maximize its lifetime utility subject to the constraints (4) (in which we incorporate (6) and (7)) and (5) taking factor prices and policy as given. De…ning as R;t and R;t the Lagrange multipliers associated with (4) and (5) respectively. The …rst order conditions are:…”

Section: A First Order Conditions A1 Rich Householdsmentioning

confidence: 99%

“…To do this, we utilize the key endogenous variables of the model. For example, to quantify aggregate e¤ects, we employ variables such as output and social welfare, while, to measure distributional e¤ects, we …nd it natural to use variables like the net income of Rich and Poor households, inequality in net incomes and wages, 4 household speci…c welfare as well as relative welfare.…”

Section: Introductionmentioning

confidence: 99%

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Public Debt Consolidation and its Distributional Effects

Sakkas

Varthalitis

2019

The Manchester School

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We build a dynamic general equilibrium model with heterogeneous households, namely Rich and Poor, and capitalskill complementarity structure in the production function, to study aggregate and distributional implications of fiscal consolidation policies when the government uses a rich set of spending and tax instruments. Fiscal policy is conducted through constrained optimized fiscal rules. Our results show that, in the long run, fiscal consolidation enhances both aggregate efficiency and equity; however, it may hurt Rich households depending on which fiscal instrument takes advantage of the fiscal space created. Along the transition, wage inequality significantly increases due to the capital skill complementarity structure of the production function. Specifically, this happens because debt consolidation crowds in capital and this favours Rich (skilled) households. On the other hand, the reduction in interest rates and government bonds lead to a decrease in Rich households income coming from capital and government bonds which eventually decrease income inequality. Finally, a rather novel finding is that the combination of asset and skill heterogeneity amplifies the increase in wage inequality in the early phase of fiscal consolidation.

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Section: A First Order Conditions A1 Rich Householdsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Public Debt Consolidation and its Distributional Effects

Sakkas

Varthalitis

2019

The Manchester School

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“…5. When looking at longer horizons, it is natural to allow for mobility from unskilled to skilled labor due to human capital investment and university education [see, e.g., He (2012), Angelopoulos et al (2017) for models incorporating the joint determination of the relative skill supply and the skill premium]. In such contexts, the microfoundations that lead to socio-economic exclusion and/or social mobility are important for long-run outcomes and transitional dynamics [see, e.g., Matsuyama (2006), Aghion and Howitt (2009, Chap.…”

Section: Discussionmentioning

confidence: 99%

The Optimal Distribution of the Tax Burden Over the Business Cycle

Angelopoulos

Asimakopoulos²,

Malley

2017

Macroecon. Dynam.

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This paper analyses optimal income taxes over the business cycle under a balanced-budget restriction, for low, middle and high income households. A model incorporating capital-skill complementarity in production and di¤erential access to capital and labour markets is developed to capture the cyclical characteristics of the US economy, as well as the empirical observations on wage (skill premium) and wealth inequality. We …nd that the tax rate for high income agents is optimally the least volatile and the tax rate for low income agents the least countercyclical. In contrast, the path of optimal taxes for the middle income group is found to be very volatile and counter-cyclical. We further …nd that the optimal response to output-enhancing capital equipment technology and spending cuts is to increase the progressivity of income taxes. Finally, in response to positive TFP shocks, taxation becomes more progressive after about two years.

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“…Human capital is primarily a carrier of skilled labour and technological knowledge, which form the basis of scientific and technological progress (Angelopoulos, Malley, & Philippopoulos, 2017). It plays a decisive role in the development of modern disruptive technologies and is an important factor in their effective use.…”

Section: Research Questionsmentioning

confidence: 99%