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Consumption and Income Inequality across Generations

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  • Gallipoli, Giovanni
  • Low, Hamish
  • Mitra, Aruni

Abstract

We characterize the joint evolution of cross-sectional inequality in earnings, other sources of income and consumption across generations in the U.S. To account for cross-sectional dispersion, we estimate a model of intergenerational persistence and separately identify the influences of parental factors and of idiosyncratic life-cycle components. We find evidence of family persistence in earnings, consumption and saving behaviours, and marital sorting patterns. However, the quantitative contribution of idiosyncratic heterogeneity to cross-sectional inequality is significantly larger than parental effects. Our estimates imply that intergenerational persistence is not high enough to induce further large increases in inequality over time and across generations.

Suggested Citation

  • Gallipoli, Giovanni & Low, Hamish & Mitra, Aruni, 2020. "Consumption and Income Inequality across Generations," CEPR Discussion Papers 15166, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15166
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    2. Koeniger, Winfried & Zanella, Carlo, 2022. "Opportunity and inequality across generations," Journal of Public Economics, Elsevier, vol. 208(C).

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    More about this item

    Keywords

    Consumption; Income; inequality; Intergenerational Persistence;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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