Heterogeneous patience, population growth, and wealth accumulation

Abstract We study a neoclassical growth model with population growth and heterogeneous agents. The model can be interpreted as either a Ramsey model with heterogeneous discounting and entry of new agents with zero endowments or an OLG model with infinitely-lived agents with different discount factors. We prove that, in the unique stationary equilibrium, agents other than the most patient may hold capital. Introducing public debt, a labor income tax, or a capital subsidy allows more agent types to save, reducing inequality among agents with different discount factors while increasing inequality among agents with the same discount factor entered in different periods.