Wealth Dynamics in Communities
Abstract/Contents
- Abstract
- This paper develops a model to explore how favor exchange influences wealth dynamics. We identify a key obstacle to wealth accumulation: wealth crowds out favor exchange. Therefore, households must choose between growing their wealth and accessing favor exchange. We show that low-wealth households rely on favor exchange at the cost of having tightly limited long-term wealth. As a result, initial wealth disparities persist and can even grow worse. We then explore how communities and policymakers can overcome this obstacle. Using simulations, we show that community benefits and place-based policies can stimulate both saving and favor exchange, and in some cases, can even transform favor exchange into a force that accelerates wealth accumulation.
Description
| Type of resource | text |
|---|---|
| Date created | August 18, 2021 |
Creators/Contributors
| Author | Barron, Daniel |
|---|---|
| Author | Guo, Yingni |
| Author | Reich, Bryony |
| Organizer of meeting | Board, Simon |
| Organizer of meeting | Cisternas, Gonzalo |
| Organizer of meeting | Frick, Mira |
| Organizer of meeting | Georgiadis, George |
| Organizer of meeting | Skrzypacz, Andrzej |
| Organizer of meeting | Sugaya, Takuo |
Subjects
| Subject | economics |
|---|---|
| Genre | Text |
| Genre | Working paper |
| Genre | Grey literature |
Bibliographic information
Access conditions
- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
- License
- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Barron, D., Guo, Y., and Reich, B. (2022). Wealth Dynamics in Communities. Stanford Digital Repository. Available at https://purl.stanford.edu/ht756wz2909
Collection
SITE Conference 2021
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