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Title: Inequality and the Lifecycle

Citation Type: Miscellaneous

Publication Year: 2010

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Abstract: I structurally estimate an incomplete markets lifecycle model with endogenous labor supply,using data on the joint distribution of wages, hours and consumption. The model is successfulat matching the evolution of both the first and second moments of the data over the lifecycle.The key challenge is to generate declining inequality in annual hours worked over the first half ofthe lifecycle, while respecting the constraints imposed by the data on consumption and wages. Iargue that this is a robust feature of the data on lifecycle labor supply. Allowing for a realisticdegree of involuntary unemployment, coupled with preferences that feature inter-temporalnon-separability in the disutility of hours worked, is what allows the model to overcome thischallenge.

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Authors: Kaplan, Greg

Publisher: University of Pennsylvania

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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