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Older or Wealthier? The Impact of Age Adjustment on Cross-Sectional Inequality Measures

  • Almås, Ingvild

    ()

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Mogstad, Magne

    ()

    (Statistics Norway)

Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-section data, a concern is that one confuses older with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates wealth inequality due to age, yet preserves inequality arising from other factors. Using a new cross-country comparable database, we examine the impact of age adjustments on wealth inequality across countries and over time. We find that the most widely used method yield a substantially different picture of age adjusted wealth inequality than our method.

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Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 9/2010.

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Length: 55 pages
Date of creation: 09 Mar 2010
Date of revision:
Handle: RePEc:hhs:nhheco:2010_009
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