This study focuses on the transmission of inequality over the working life. A model of constrained intertemporal choice is used to provide structure to the distributional dynamics of wages, earnings, income and consumption. The mechanisms used to insure labour market shocks are examined in a partial-insurance setting where the manner and scope for insurance depends on the access to credit, the information available to consumers and the durability of income shocks. Drawing on recent research, family labour supply, the credit market and the tax system are all shown to play a key role. These mechanisms vary in importance across different points of the life cycle and the business cycle.
Authors
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
Journal article details
- DOI
- 10.1111/ecoj.12133
- Publisher
- Wiley
- Issue
- May 2014
Suggested citation
Blundell, R. (2014). 'Income dynamics and life-cycle inequality: mechanisms and controversies' (2014)
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