Labor Market, Income Distribution, and Mobility (Intergenerational) in Colombia

We examine the dynamic of income distribution within a model of overlapped generations with imperfect information in the labor market. Our main point is the possibility of endogenous persistence processess in the distribution, with respect to the degree of talent of the workers.  The economies implicitly face two types of costs when hiring qualified workers: the possibility of hiring a not-talented worker (with lower performance) and the opportunity cost of this decision regarding the hiring of another worker. These problems may provide an alternative (supplementary) explanation of the growing income inequality in Colombia and the growing income gap: as well as the dispersion between education groups. At the empirical level, we examine the mobility of income distribution following the indexes methodology of Shorrocks (1978a) in terms of the link between generations, to relation income mobility with income distribution, economic growth, and wage gaps.  The main finding is the possibility of strong links between generational mobility and income distribution, backed by empirical evidence.