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Inequality in an Equal Society

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  • Laura A. Harvey

    ()

  • Jochen O. Mierau

    ()

  • James Rockey

    ()

Abstract

A society in which everybody is the same at the same stage of the life-cycle will exhibit substantial income and wealth inequality. We use this idea to empirically quantify natural inequality – the share of observed inequality attributable to life-cycle profiles of income and wealth. We document that recent increases in inequality in the United States and other developed countries are both larger than observed rates would suggest, and represent a distinct change from the period 1960-1980. Extrapolating our measures forward suggests that natural inequalities will fluctuate over the next 20 years before settling to a new higher level.

Suggested Citation

  • Laura A. Harvey & Jochen O. Mierau & James Rockey, 2017. "Inequality in an Equal Society," LWS Working papers 26, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:lwswps:26
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    References listed on IDEAS

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    1. Mike Brewer & Liam Wren-Lewis, 2016. "Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 289-322, June.
    2. Brewer, Mike & Wren-Lewis, Liam, 2012. "Accounting for changes in income inequality: decomposition analyses for Great Britain, 1968-2009," ISER Working Paper Series 2012-17, Institute for Social and Economic Research.
    3. Ingvild Almås & Tarjei Havnes & Magne Mogstad, 2011. "Baby booming inequality? Demographic change and earnings inequality in Norway, 1967–2000," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 629-650, December.
    4. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June.
    5. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    6. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 519-578.
    7. Milanovic, Branko, 1997. "A simple way to calculate the Gini coefficient, and some implications," Economics Letters, Elsevier, vol. 56(1), pages 45-49, September.
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    More about this item

    Keywords

    Income Inequality; Wealth Inequality; Demographic Structure;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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