Permanent Income, Convergence And Inequality Among Countries
AbstractThe literature on inequality has generally focused on the analysis of annual per capita income. This paper adopts a different approach by considering the life-cycle dimension of inequality and convergence between economies from 1960 to 2000. We analyze the present value of the set of incomes individuals obtain throughout their whole life (permanent income). On the basis of this approach, various simulations are made to determine the effect on inequality in permanent income of variables such as survival rates and the long-run growth rates in current income. The results indicate that survival rates are an important source of inequality. Inequality in permanent income is about one third higher than in current income. The implication of this finding is that if the whole life-cycle dimension is not considered, the level of inequality among economies is being underestimated. Copyright 2008 The Authors.
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Bibliographic InfoArticle provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.
Volume (Year): 54 (2008)
Issue (Month): 1 (03)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6586
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- Jose M. Pastor & Lorenzo Serrano, 2011.
"European integration and inequality among countries: a lifecycle income analysis,"
ERSA conference papers
ersa10p1424, European Regional Science Association.
- José M. Pastor & Lorenzo Serrano, 2012. "European Integration and Inequality among Countries: A Lifecycle Income Analysis," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 186-199, 02.
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- Álvarez, Inmaculada & Barbero, Javier, 2013. "Knowledge Spillovers in Neoclassical Growth Model: an extension with Public Sector," Working Papers in Economic Theory 2013/07, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
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