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Cross Sectional Facts for Macroeconomists

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Author Info

  • Dirk Krueger

    (University of Pennsylvania)

  • Fabrizio Perri

    (Federal Reserve Bank of Minneapolis)

  • Luigi Pistaferri

    (Stanford University)

  • Giovanni L. Violante

    (New York University)

Abstract

This paper provides an introduction to the special issue of the Review of Economic Dynamics on "Cross Sectional Facts for Macroeconomists''. The issue documents, for nine countries, the level and the evolution, over time and over the life cycle, of several dimensions of economic inequality, including wages, labor earnings, income, consumption, and wealth. After describing the motivation and the common methodology underlying this empirical project, we discuss selected results, with an emphasis on cross-country comparisons. Most, but not all, countries experienced substantial increases in wages and earnings inequality, over the last three decades. While the trend in the skill premium differed widely across countries, the experience premium rose and the gender premium fell virtually everywhere. At a higher frequency, earnings inequality appears to be strongly counter-cyclical. In all countries, government redistribution through taxes and transfers reduced the level, the trend and the cyclical fluctuations in income inequality. The rise in income inequality was stronger at the bottom of the distribution. Consumption inequality increased less than disposable income inequality, and tracked the latter much more closely at the top than at the bottom of the distribution. Measuring the age-profile of inequality is challenging because of the interplay of time and cohort effects. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2009.12.001
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 13 (2010)
Issue (Month): 1 (January)
Pages: 1-14

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Handle: RePEc:red:issued:10-0

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Related research

Keywords: Wages; Income; Consumption; Wealth; Long-run trends in inequality; Life-cycle inequality; Inequality over the business cycle; Government redistribution; Estimation of earnings dynamics;

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References

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  1. Angus Deaton & Christina Paxson, 1993. "Intertemporal Choice and Inequality," NBER Working Papers 4328, National Bureau of Economic Research, Inc.
  2. Debreu,Gerard Introduction by-Name:Hildenbrand,Werner, 1986. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521335614.
  3. Wolff, Edward N, 1992. "Changing Inequality of Wealth," American Economic Review, American Economic Association, vol. 82(2), pages 552-58, May.
  4. Peter Gottschalk & Susan E. Mayer, 1997. "Changes in Home Production and Trends in Economic Inequality," Boston College Working Papers in Economics 382, Boston College Department of Economics.
  5. Aiyagari, S Rao, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 659-84, August.
  6. Laitner, John, 1979. "Household Bequest Behaviour and the National Distribution of Wealth," Review of Economic Studies, Wiley Blackwell, vol. 46(3), pages 467-83, July.
  7. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  8. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  9. Imrohoruglu, Ayse, 1989. "Cost of Business Cycles with Indivisibilities and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1364-83, December.
  10. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Facts for heterogeneous agent macroeconomics
    by Economic Logician in Economic Logic on 2010-03-09 15:30:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Modalsli, Jørgen Heibø, 2011. "Polarization, Risk and Welfare in General Equilibrium," Memorandum 27/2011, Oslo University, Department of Economics.
  2. Etheridge, B, 2012. "The Effect of Income Risk, Asset Risk and Policy Risk on Household Behaviour," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
  3. Bick, Alexander & Choi, Sekyu, 2011. "Life-cycle consumption: can single agent models get it right?," MPRA Paper 30910, University Library of Munich, Germany.
  4. Mark Bils & Mark Aguiar, 2010. "Has Consumption Inequality Mirrored Income Inequality?," 2010 Meeting Papers 1334, Society for Economic Dynamics.
  5. Jeffrey Thompson & Timothy M. Smeeding, 2010. "Recent Trends in the Distribution of Income: Labor, Wealth and More Complete Measures of Well Being," Working Papers wp225, Political Economy Research Institute, University of Massachusetts at Amherst.
  6. Charles Jones & Pete Klenow, 2010. "Beyond GDP? Welfare Across Countries and Time," Discussion Papers 10-001, Stanford Institute for Economic Policy Research.
  7. Dominik Sachs & Sebastian Findeisen, 2012. "Education and Optimal Dynamic Taxation," 2012 Meeting Papers 365, Society for Economic Dynamics.
  8. Jonathan Vogel & Javier Cravino & Ariel Burstein, 2011. "Importing Skill-Biased Technology," 2011 Meeting Papers 440, Society for Economic Dynamics.
  9. Virginia Maestri & Andrea Roventini, 2012. "Inequality and Macroeconomic Factors: A Time-Series Analysis for a Set of OECD Countries," LEM Papers Series 2012/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  10. Virginia Maestri & Roventini, A. (Andrea), 2012. "GINI DP 30: Stylized Facts on Business Cycles and Inequality," GINI Discussion Papers 30, AIAS, Amsterdam Institute for Advanced Labour Studies.
  11. Bertola, Giuseppe & Lo Prete, Anna, 2010. "Whence Policy? Government Policies, Finance, and Economic Integration," CEPR Discussion Papers 7820, C.E.P.R. Discussion Papers.
  12. Nao Sudo & Michio Suzuki & Tomoaki Yamadai, 2012. "Inequalities in Japanese Economy during the Lost Decades," CARF F-Series CARF-F-284, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  13. Fatih Karahan & Serdar Ozkan, . "On the Persistence of Income Shocks over the Life Cycle: Evidence, Theory, and Implications," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.

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