UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Labor income dynamics and the insurance from taxes, transfers, and the family

Blundell, R; Graber, M; Mogstad, M; (2015) Labor income dynamics and the insurance from taxes, transfers, and the family. Journal of Public Economics , 127 pp. 58-73. 10.1016/j.jpubeco.2014.04.011. Green open access

[img] PDF
1-s2.0-S0047272714000930-main.pdf

Download (1MB)

Abstract

What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profiles? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian population panel data to answer these important questions. We let individuals with different education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profiles, and shocks of varying persistence. We find that the income processes differ systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the redistributive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle.

Type: Article
Title: Labor income dynamics and the insurance from taxes, transfers, and the family
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jpubeco.2014.04.011
Publisher version: http://dx.doi.org/10.1016/j.jpubeco.2014.04.011
Language: English
Additional information: Copyright © 2014 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/3.0/).
Keywords: Income dynamics, Insurance, Life cycle inequality
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/1432915
Downloads since deposit
74Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item