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Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values

Listed author(s):
  • Audra J. Bowlus

    (University of Western Ontario - UWO - University of Western Ontario)

  • Jean-Marc Robin

    ()

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - INSEE - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique)

In this paper we study the evolution of lifetime labour income inequality by constructing present value life cycle measures that incorporate both earnings and employment risk. We find that, even though lifetime income inequality is 40% less than earnings inequality, the total increase in lifetime income inequality over the past 20 years is the same as earnings inequality. While the total increase is the same, the pathways there differ with earnings inequality experiencing a steady increase and lifetime income inequality increasing in spurts particularly in the latter half of the 1990s. Finally, we find the changes in lifetime income inequality are primarily driven by changes in earnings mobility and changes in the earnings distribution itself, changes in employment risk and the composition of the sample, such as the shift toward attaining more education and the ageing population, do not play a large role. Copyright 2004 The Review of Economic Studies Ltd.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00279656.

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Date of creation: Jul 2004
Publication status: Published in The Review of Economic Studies, 2004, 71 (3), pp.709-742
Handle: RePEc:hal:cesptp:hal-00279656
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00279656
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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