Aggregate Earnings Inequality in Europe: Permanent Differences or Transitory Fluctuations?
AbstractThis paper examines the relationship between aggregate inequality and its underlying components for a number of European countries. We use a well established GMM approach to separate the permanent component from the transitory component of earnings inequality. Our results show that three quarters of the observed cross-country differences in aggregate inequality in Europe is accounted for by differences in permanent inequality, reflecting differences in individual characteristics that persist throughout the life-cycle.
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Bibliographic InfoPaper provided by Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n211-10.pdf.
Length: 13 pages
Date of creation: 2010
Date of revision:
Permanent Inequality; Transitory Inequality; Generalized Method of Moments; Covariance Structure of Earnings;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-24 (All new papers)
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- Stephen Jenkins & Peter Lambert, 2011. "Robert Moffitt and Peter Gottschalk’s 1995 paper ‘Trends in the covariance structure of earnings in the US: 1969–1987’," Journal of Economic Inequality, Springer, vol. 9(3), pages 433-437, September.
- Aedin Doris & Donal O'Neill & Olive Sweetman, 2010. "GMMCOVEARN: A Stata Module for GMM Estimation of the Covariance Structure of Earnings," Economics, Finance and Accounting Department Working Paper Series n212-10.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
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