Insurance, redistribution, and the inequality of lifetime income

Peter Haan, Daniel Kemptner, Victoria Prowse

Individuals vary considerably in how much they earn during their lifetimes. We study how the tax-and-transfer system o sets inequalities in lifetime earnings, which would otherwise translate into differences in living standards. Based on a life-cycle model, we find that redistribution by taxes and transfers off sets 54% of the inequality in lifetime earnings that is due to heterogeneous skill endowments. Meanwhile, taxes and transfers insure 45% of lifetime earnings risk. Taxes would provide more insurance if based on lifetime instead of annual earnings. Requiring wealthy individuals to repay social assistance received when younger would strengthen the insurance and redistributive functions of social assistance.

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Year of publication:	[2019]
Authors:	Haan, Peter ; Kemptner, Daniel ; Prowse, Victoria
Publisher:	Munich, Germany : Collaborative Research Center Transregio 190
Subject:	Lifetime earnings \| lifetime income \| tax-and-transfer system \| taxation \| unemployment insurance \| disability benefits \| social assistance \| inequality \| redistribution \| insurance \| endowments \| risk \| dynamic life-cycle models \| Umverteilung \| Redistribution \| Lebenseinkommen \| Lifetime income \| Arbeitslosenversicherung \| Unemployment insurance \| Theorie \| Theory \| Öffentliche Sozialleistungen \| Social security benefits \| Lebenszyklus \| Life cycle \| Erwerbsminderungsrente \| Disability benefits \| Einkommensverteilung \| Income distribution

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Extent:	1 Online-Ressource (circa 52 Seiten) Illustrationen
Series:	Discussion paper. - München : Collaborative Research Center Transregio 190, ZDB-ID 2881680-8. - Vol. no. 188 (September 30, 2019)
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/208088 [Handle]
Classification:	D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; i24 ; I38 - Government Policy; Provision and Effects of Welfare Programs ; J22 - Time Allocation and Labor Supply ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012108653