APL (Ajiken Power Lunch)

APL (Ajiken Power Lunch) is a lunchtime workshop open to public, including IDE staffs, visiting research fellows, IDEAS students, outside researchers and graduate students. This workshop provides a platform for presentation of any work in progress where we can discuss in either English or Japanese.

Those who would attend a seminar are asked to announce yourself to receptionists on your arrival at the IDE and to obtain APL Organizers' signature on your admission card after the seminar.

August 17, 2015. (Monday) 14：00-15：30

Institute of Developing Economies, Japan External Trade Organization C23 Meeting Room 　

Risk-Taking, Market Selection and Income Mobility:Theory and Applications

We develop a Markov mobility model to study how market competition, as the market deepens to the extent that entrepreneurial undertaking becomes viable, effectively screens the individuals/households’ entrepreneurial abilities by rewarding those with high abilities and punishing the less able, and, as a consequence, how the screening leads to intergenerational income mobility in favor of the former even when and if the latter is privileged to initially possess more wealth than the former. Our theory has implications for understanding the income and wealth mobility, especially in the economies, such as the post-reform China and the post-apartheid South Africa, wherein the expanding market order has been rapidly reshaping the economic life that used to be deeply embedded in the social fabric and long entrenched institutions, which are often against the logic of the market. We confront our theoretical predictions with a dataset regarding income mobility of about 1500 households in rural China during the period 1989-2009 and empirical evidence from the history of other economies as well.

Guang-Zhen Sun (Professor, University of Macau, China)

Ning Wang (VRF)

English