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dc.contributor.authorPrimiceri, Giorgio E.en_US
dc.contributor.authorvan Rens, Thijsen_US
dc.date.accessioned2008-06-27en_US
dc.date.accessioned2010-07-07T11:35:06Z-
dc.date.available2010-07-07T11:35:06Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/35228-
dc.description.abstractWas the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to decompose idiosyncratic changes in income into predictable life-cycle changes, transitory and permanent shocks and estimate the contribution of each to total inequality. Our model fits the joint evolution of consumption and income inequality well and delivers two main results. First, we find that permanent changes in income explain all of the increase in inequality in the 1980s and 90s. Second, we reconcile this finding with the fact that consumption inequality did not increase much over this period. Our results support the view that many permanent changes in income are predictable for consumers, even if they look unpredictable to the econometrician, consistent with models of heterogeneous income profiles.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA Discussion Papers 3239en_US
dc.subject.jelD12en_US
dc.subject.ddc330en_US
dc.subject.keywordConsumptionen_US
dc.subject.keywordinequalityen_US
dc.subject.keywordrisken_US
dc.subject.keywordincomplete marketsen_US
dc.subject.keywordheterogeneityen_US
dc.subject.stwWirtschaftslageen_US
dc.subject.stwSchocken_US
dc.subject.stwRisikoen_US
dc.subject.stwEinkommensverteilungen_US
dc.subject.stwKonsumen_US
dc.subject.stwWohlfahrtseffekten_US
dc.subject.stwLebenszyklusen_US
dc.subject.stwUSAen_US
dc.titleHeterogeneous life-cycle profiles, income risk and consumption inequalityen_US
dc.typeWorking Paperen_US
dc.identifier.ppn560200862en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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