A common critique of most measures of income inequality, which are based on a single year's income, is that they fail to take account of income mobility. If income fluctuations are large, and individuals can smooth consumption, then high inequality and high mobility may be no worse than low...

This paper analyses the relationship between technological progress, intergenerational earnings mobility, and economic growth. The analysis demonstrates that the interplay between technological progress and two components that determine individual earnings – parental human capital and...

We investigate the relationship between inequality and intergenerational mobility. Proxying fathers’ earnings with using detailed occupational data, we find that sons who grew up in countries that were more unequal in the 1970s were less likely to have experienced social mobility by the...

This paper surveys major empirical regularities concerning changes in earnings inequality in Europe and the US over the past 25 years. Next, it indicates which of these regularities can be explained within the competitive demand-supply framework of analysis and what is left unexplained. Finally,...

This paper studies the effects of progressive income taxes and education finance in a dynamic heterogeneous agent economy. Such redistributive policies entail distortions to labour supply and savings, but also serve as partial substitutes for missing credit and insurance markets. The resulting...

In a number of high-income countries over the past few decades there has been a large growth in income inequality and at the same time a shift in the burden of taxation from the top to the middle of the income distribution. This paper applies the theory of optimal piecewise linear taxation to...

This study explains the evolution of wage inequality over the last 30 years and supports this explanation with evidence. At each level of schooling, a faster rate of technological progress weakens the link between schooling and work and increases the unknown needed to cope with during one's...

One often heard counter to the concern on rising income and wealth inequality is that it is wrong to focus on inequality of outcomes in a “snapshot.” Intergenerational mobility and “equality of opportunity”, so the argument goes, is what matters for normative evaluation. In response to...

In this paper, we demonstrate how age-adjusted inequality measures can be used to evaluate whether changes in inequality over time are due to changes in the age-structure. To this end, we use administrative data on earnings for every male Norwegian over the period 1967-2000. We find that the...

We investigate how vertical unity within a community interacts with horizontal class divisions of an unequal income distribution. Community is conceptualized in terms of a public good to which all those in the community have equal access, but from which outsiders are excluded. We formulate the...