Blundell, Richard; Pistaferri, Luigi; Saporta-Eksten, Itay - Institute for the Study of Labor (IZA) - 2012
In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that … incorporates household consumption and family labor supply decisions. We derive analytical expressions based on approximations for … the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non …