Educational Choice, Lifetime Earnings Inequality, and Conflicts of Public Policy
AbstractDrawing on and extending the theory of human capital, a comprehensive life-cycle model of individual earnings is designed. The approach taken permits an isolated analysis of three interconnected levels of aggregation (intra-cohort distribution, overall distribution, and lifetime distribution) within the same dynamic microeconomic model of educational choice. In this way, interrelated economic, demographic, fiscal effects on earnings inequality are established. The paper reveals that reallocation reactions of optimizing individuals, combined with population heterogeneity by productive endowments, learning abilities, and working age, can destroy simple relationships between the standard of living, current earnings inequality, lifetime earnings inequality, and public distributional policy.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1014.
Date of creation: Sep 1994
Date of revision:
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Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
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