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Baby Booming Inequality? Demographic Change and Earnings Inequality in Norway, 1967-2000

  • Ingvild Almås
  • Tarjei Havnes
  • Magne Mogstad

In this paper, we demonstrate how age-adjusted inequality measures can be used to evaluate whether changes in inequality over time are due to changes in the age structure. To this end, we use administrative data on earnings for every male Norwegian during 1967-2000. We find that the substantial rise in earnings inequality over the 1980s and into the early 1990s, is to some extent driven by the fact that the large baby boom cohorts are approaching the peak of the age-earnings profile. We further demonstrate that the impact of age adjustments on the trend in inequality during the period from 1993-2000 is highly sensitive to the method used: while the most widely used age-adjusted inequality measure indicates little change in inequality over this period, a new and improved age-adjusted measure suggests a decline in inequality.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3200.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3200
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  7. Ingvild Almas & Magne Mogstady, 2009. "Older or Wealthier?: The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries," SOEPpapers on Multidisciplinary Panel Data Research 181, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. Almås, Ingvild & Mogstad, Magne, 2010. "Older or Wealthier? The Impact of Age Adjustment on Cross-Sectional Inequality Measures," Discussion Paper Series in Economics 9/2010, Department of Economics, Norwegian School of Economics.
  9. Wertz, Kenneth L, 1979. "The Measurement of Inequality: Comment," American Economic Review, American Economic Association, vol. 69(4), pages 670-72, September.
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  17. Foster, James E & Shorrocks, Anthony F, 1991. "Subgroup Consistent Poverty Indices," Econometrica, Econometric Society, vol. 59(3), pages 687-709, May.
  18. Erik Fjærli & Rolf Aaberge, 2000. "Tax Reforms, Dividend Policy and Trends in Income Inequality Empirical Evidence based on Norwegian Data," Discussion Papers 284, Statistics Norway, Research Department.
  19. Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 488-499, August.
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  23. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-27, September.
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