Premium
Rent Sharing, Aggregate Saving, and Growth
Author(s) -
Engel Charles,
Kletzer Kenneth M.
Publication year - 1998
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00032
Subject(s) - economics , overlapping generations model , aggregate (composite) , microeconomics , work (physics) , monetary economics , labour economics , mechanical engineering , materials science , engineering , composite material
The paper investigates the effects on saving and growth of the rent sharing between firm owners and workers documented in recent empirical work. In an overlapping‐generations framework, more rent sharing is found to increase growth. This result also holds in a model with a single generation of infinitely lived consumers in which some consumers are patient and save and others are impatient but credit‐constrained and simply consume all their current income. This latter result is surprising since rent sharing effectively redistributes income from savers to nonsavers, yet raises aggregate saving.