Suppose the intergenerational curve for the white and black families are as follows, respectively: ――

Question

Suppose the intergenerational curve for the white and black families are as follows, respectively:
                        ――                       ―――
                        yw,t = 25 + 0.5 * yw,t-1

――                      ―――
                       yb,t = 21 + 0.3 * yb,t-1

Please calculate the steady state income rank for both groups. Please also calculate the racial gap in income rank in the seady state.

Kunduz · Accepted Answer

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