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Inequality and the life cycle

Author(s): Kaplan, Greg

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dc.contributor.authorKaplan, Greg-
dc.date.accessioned2019-07-11T19:20:14Z-
dc.date.available2019-07-11T19:20:14Z-
dc.date.issued2012-11en_US
dc.identifier.citationKaplan, G. (2012). Inequality and the life cycle. Quantitative Economics, 3 (3), 471 - 525. doi:10.3982/QE200en_US
dc.identifier.issn1759-7323-
dc.identifier.urihttp://arks.princeton.edu/ark:/88435/pr16t6c-
dc.description.abstractI structurally estimate an incomplete markets life-cycle model with endogenous labor supply using data on the joint distribution of wages, hours, and consumption. The model is successful at matching the evolution of both the first and second moments of the data over the life cycle. The key challenge for the model is to generate declining inequality in annual hours worked over the first half of the working life, while respecting the constraints imposed by the data on consumption and wages. I argue that this is a robust feature of the data on life-cycle labor supply that is strongly at odds with the intratemporal first-order condition for labor. Allowing for a realistic degree of involuntary unemployment, coupled with preferences that feature nonseparability in the disutility of the extensive and intensive margins of hours worked, allows the model to overcome this challenge. The results imply that labor market frictions are important in jointly accounting for observed cross-sectional inequality in labor supply and consumption, and may have quantitative relevance for analyses that exploit the intratemporal first-order condition for labor. © 2012 Greg Kaplan.en_US
dc.format.extent471 - 525en_US
dc.language.isoenen_US
dc.relation.ispartofQuantitative Economicsen_US
dc.rightsFinal published version. Article is made available in OAR by the publisher's permission or policy.en_US
dc.titleInequality and the life cycleen_US
dc.typeJournal Articleen_US
dc.identifier.doidoi:10.3982/QE200-
dc.identifier.eissn1759-7331-
pu.type.symplectichttp://www.symplectic.co.uk/publications/atom-terms/1.0/journal-articleen_US

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