Inequality Over the Life-Cycle: U.S. vs Europe

  • 研討會日期 : 2021-01-12
  • 時間 : 10:30
  • 主講人 : Mr. Mehrdad Esfahani
  • 主持人 : Professor Wan-Jung Cheng
  • 地點 : online
  • 演講者簡介 : Mr. Esfahani will receive his Ph.D. in Economics from Arizona State University in 2021. His research fields are Macroeconomics, Income and Wealth Inequality, U.S. and Global Productivity Trends, and Economic Growth and Development. He is applying for a position of the Institute of Economics, Academia Sinica now.
  • 演講摘要 : I document that (i) the mean and dispersion of pre-tax labor earnings grow faster over the life-cycle in the U.S. than in some European countries; (ii) these facts are largely driven by individuals with at least a college degree. I study these differences in labor earnings inequality using a life-cycle model of human capital accumulation and elastic labor supply which features non-linear taxation, in conjunction with a college choice and complementary investments during college. The model economy accounts for the differential mean earnings growth patterns of individuals with and without a college degree in the United States, as well as the observed within-group inequality over the life cycle. In the model, non-linear taxation significantly sup-presses pre-tax earnings, reduces college attendance, and investments during college. More generous subsidies and transfers for college exacerbate labor earning inequality. I find that differences in taxation and college subsidies alone account for 94% of the differences in mean earnings, and 80% of the differences in variance of log earnings over the life-cycle across the U.S. and European countries. To fully reconcile the model with data, the role of differences in initial conditions appear key.