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Age-specific rise of income and consumption inequality


  • Zhu, Guozhong


Based on Panel Study of Income Dynamics (PSID) and Consumer Expenditure Survey (CEX), the author presents evidence that the rise of income/consumption inequality over the past decades is more significant among younger households. This is consistent with the theory that the secular rise of inequality is due to increasing heterogeneity in earning ability. The author further shows that such age-specificity implies significant changes to the previously documented life-cycle profiles of inequality which are the basis of many important economic inferences.

Suggested Citation

  • Zhu, Guozhong, 2013. "Age-specific rise of income and consumption inequality," Economics Discussion Papers 2013-21, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201321

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    References listed on IDEAS

    1. Mark Huggett & Juan Carlos Parra, 2010. "How Well Does the U.S. Social Insurance System Provide Social Insurance?," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 76-112, February.
    2. Storesletten, Kjetil & Telmer, Christopher I. & Yaron, Amir, 2004. "Consumption and risk sharing over the life cycle," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 609-633, April.
    3. Laurence Ales & Maziero Pricila, "undated". "Accounting for Private Information," GSIA Working Papers 2010-E58, Carnegie Mellon University, Tepper School of Business.
    4. Richard Blundell & Ian Preston, 1998. "Consumption Inequality and Income Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 603-640.
    5. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    6. Fatih Guvenen, 2007. "Learning Your Earning: Are Labor Income Shocks Really Very Persistent?," American Economic Review, American Economic Association, vol. 97(3), pages 687-712, June.
    7. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2005. "Two Views of Inequality Over the Life Cycle," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 765-775, 04/05.
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    More about this item


    age-specific inequality; consumption inequality; income inequality; life-cycle profile;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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