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We characterize the joint evolution of cross-sectional inequality in income and consumption across generations. We estimate a model of intergenerational persistence and separately identify influences of parental heterogeneity and idiosyncratic factors. We find evidence of family persistence in earnings and consumption, and of marital sorting. Idiosyncratic heterogeneity, however, accounts for most of cross-sectional inequality. Within-family insurance represents a modest part of overall consumption insurance and is largest for the richest quartile. Insurance among the poorest comes from outside the family. Our findings suggest intergenerational persistence would have to be much higher to induce, by itself, substantial increases in inequality

Author

Listed:
  • Giovanni Gallipoli

    (Vancouver School of Economics, UBC)

  • Hamish Low

    (University of Oxford)

  • Aruni Mitra

    (European University Institute)

Abstract

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  • Giovanni Gallipoli & Hamish Low & Aruni Mitra, 2020. "We characterize the joint evolution of cross-sectional inequality in income and consumption across generations. We estimate a model of intergenerational persistence and separately identify influences ," Working Papers 2020-061, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2020-061
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Gallipoli_Low_Mitra_2022_consumption-income-inequality-generations.pdf
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    References listed on IDEAS

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    1. Consumption and Income Inequality across Generations
      by Christian Zimmermann in NEP-DGE blog on 2020-09-07 03:19:30

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    1. 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

    income; Consumption; intergenerational persistence; Inequality;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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