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Interpreting Life Cycle Inequality Patterns as an Efficient Allocation: Mission Impossible?

  • Alejandro Badel

    (Federal Reserve Bank of St. Louis)

  • Mark Huggett

    (Georgetown University)

The life-cycle patterns of consumption, wage and hours inequality observed in U.S. cross-section data are commonly viewed as incompatible with a Pareto efficient allocation. We determine the extent to which these qualitative and quantitative patterns can or cannot be produced by Pareto efficient allocations in models with preference shocks, wage shocks and full information. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2014.02.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 17 (2014)
Issue (Month): 4 (October)
Pages: 613-629

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Handle: RePEc:red:issued:12-119
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