Labor income dynamics and the insurance from taxes, transfers and the family

Arbeitspapier

What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profi les? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian data to answer these important questions. We let individuals with di fferent education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profi les, and shocks of varying persistence. We find that the income processes diff er systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the progressive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IFS Working Papers ; No. W14/01

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Wage Level and Structure; Wage Differentials
• Thema: Income Dynamics ; Insurance ; Life Cycle Inequality

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Blundell, Richard ; Graber, Michael ; Mogstad, Magne
• Ereignis: Veröffentlichung
• (wer): Institute for Fiscal Studies (IFS)
• (wo): London
• (wann): 2014

Weitere Informationen

• DOI: doi:10.1920/wp.ifs.2014.1401
• Handle: http://hdl.handle.net/10419/91508
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ