Income Inequality in a Job–Search Model With Heterogeneous Discount Factors (Revised Version, Forthcoming 2006, Revista Economia). Ensaios Econômicos da EPGE 611

This paper investigates the income inequality generated by a job-search process when di¤erent cohorts of homogeneous workers are al-lowed to have di¤erent degrees of impatience. Using the fact the av-erage wage under the invariant Markovian distribution is a decreasing function of the time preference (Cysne (2004)), I show that the Lorenz curve and the between-cohort Gini coe ¢ cient of income inequality can be easily derived in this case. An example with arbitrary measures re-garding the wage o¤ers and the distribution of time preferences among cohorts provides some quantitative insights into how much income in-equality can be generated, and into how it varies as a function of the probability of unemployment and of the probability that the worker does not \u85nd a job o¤er each period.