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Consumption and Income Inequality across Generations

Author

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  • Giovanni Gallipoli

    (UBC; CEPR; HCEO; Rimini Centre for Economic Analysis)

  • Hamish Low

    (University of Oxford, UK; IFS)

  • Aruni Mitra

    (European University Institute, Italy)

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

  • Giovanni Gallipoli & Hamish Low & Aruni Mitra, 2021. "Consumption and Income Inequality across Generations," Working Paper series 21-03, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:21-03
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    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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    Cited by:

    1. Lance Lochner & Youngmin Park, 2020. "Earnings Dynamics and Intergenerational Transmission of Skill," Working Papers 2020-075, Human Capital and Economic Opportunity Working Group.
    2. Uta Bolt & Eric French & Jamie Hentall Maccuish & Cormac O’Dea, 2018. "Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective," Working Papers wp379, University of Michigan, Michigan Retirement Research Center.
    3. Koeniger, Winfried & Zanella, Carlo, 2022. "Opportunity and inequality across generations," Journal of Public Economics, Elsevier, vol. 208(C).
    4. Gallipoli, Giovanni, 2023. "Comments on unequal growth," Journal of Monetary Economics, Elsevier, vol. 133(C), pages 19-24.

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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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