Working Paper
On the Modeling of the Income Distribution Business Cycle Dynamics
Burkhard Heer
CESifo, Munich, 2007
CESifo Working Paper No. 1945
CESifo, Munich, 2007
CESifo Working Paper No. 1945
Empirically, the income share is procyclical for the low-income groups and acyclical for the top 5%. We find that business cycle models should consider overlapping generations and elastic labor supply in order to replicate this finding.
Keywords: income distribution, business cycle, overlapping generations