Two views of inequality over the life cycle

Jonathan Heathcote, Kjetil Storesletten, Giovanni L. Violante

    Research output: Contribution to journalArticlepeer-review


    Data on the life-cycle profiles of inequality in wages, earnings, hours worked, and consumption contain precious information for answering questions about the ability of households to insure labor market risk and about the sources of this risk. This paper demonstrates that the choice of whether to control for cohort effects or for time effects has a drastic impact on the estimated age profiles for inequality and, thus on the answers to those questions. It also shows that time effects are required to account of the observed trends in inequality in 30 years of U.S. data, whereas there is no evidence that cohort effects have been important.

    Original languageEnglish (US)
    Pages (from-to)765-775
    Number of pages11
    JournalJournal of the European Economic Association
    Issue number2-3
    StatePublished - 2005

    ASJC Scopus subject areas

    • General Economics, Econometrics and Finance


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