place in a context of inequality and incomplete markets for capital there
exists thepossibility thathuman and/orphysicalcapitalaccumulation is not
eXα<ent T his is due todiπ erenα≡s in irvestmentoppor-tunities which may
perpetuate inequality itself. M odels belonging to this branch of literature
address the ccnsequences cfcapitalmarketimperfecticns fcrhuman capital
investment(GalcrandZeira1993;Owen andWeil1998;Benabcu 19 9 6aand
19 9 6b), Orforinvestmentin...xedcapital isde^eCped (B anerjeeandN ewman
1993;Aghicn and B cltcn 1997;Piketty 1997;Bhattacharya 1998).
In this paper a model is developed which exp Ores the long- run ejects
cfinccme and wealth inequality via capital market imperfections apecting
both human capital and physical capital investment. T he results may, at
east in a way, interpret the diπerent cross-countries dynamics Ofwealth
distributicn as far as multiple equilibria are cbtained. One ccuntry may
take op and converge to a high level ofwealth with the whole population
highly quali.ed, while another, because ofits worse initialcondition (highly
unequalwealth distribution and low average wealth), may be trapped into
poverty and into non quali.cation. M oreoverthe modelmay explain social
mobility, sincechanges inoccupationalclasses maybeboth thecauseandthe
epectofthe accumulation. In particularthe modelcan provide a rationale
forthe familiar determinants ofsocialmobility. Both the empiricaland the
theoreticalliterature has stressed thatthese determinants are both genetic
and altruistic. The strongerthese components, the more sons’ income and
wealtharerelatedtofathers’ones. G eneticcomponentsconsists intheability
to earn (productivity) inherited from fathers. A ltruistic components make
sons’ income depending on fathers’ ones thanks to fathers’ investments in
sons’ education and upgrading. In the model developed in this paper, if
skills areinheritableand incomes areskill-dependent, sons’incomeis related
to the fathers’ one. A nalogously, the more fathers bequeath theirsons, the
more sons’ income and wealth destiny is downward rigid, thatis the worst
sons can dois toremain in theirfathers’incomeandwealth classes. In other
words a high altruism implies upward mobility between income, wealth and
occupationalclasses.
The modelyelds dip erentdynamic patterns (see section 3) according to
theeconomy’s structuralparameters andtothetransmissionofentrepreneur-
ialskils thatis individualtechnicalindXedency IndividualindXciencyis
the sum oftwocomponents: the.rstone is genetic, resultingfrom thejoint
intuenceofgenetics and fami Harcnvironmcntwihcrc potential entrqereneur
grows up. The second componentis totally random, due tothejointaction