That historical inequality can affect long run macroeconomic performance has been argued by a large literature on endogenous inequality using models of indivisibilities in occupational choice, in the presence of borrowing constraints. These models are characterized by a continuum of steady...

Simple life cycle and permanent income hypotheses imply that changes in consumption should be unforecastable. Rational forward-looking agents ought to smooth consumption over the life cycle and exhaust the asset stock accumulated during the working career in retirement. Empirical observations...

We study the effects of different tax reporting mechanisms in experi-mental double auction markets in the laboratory. The sales tax is paidby the seller, and we compare market outcomes in a no-tax conditionto cases where (i) tax evasion is impossible, (ii) taxes can be evaded butthere is an...

The life-cycle hypothesis implies that consumption would not decline at retirement. However, several studies found relevant declines in food consumption after retirement for the United States. Others concluded that this contradiction of the life-cycle hypothesis is solved by allowing for broader...

Adaptation is omnipresent but people systematically fail to correctly anticipate the degree to which they adapt. This leads individuals to make inefficient intertemporal decisions. This paper concerns optimal income taxation to correct for such anticipation-biases in a framework where consumers...

This paper analyzes the main uncertainty of college saving - the child’s ability - in the context of the saving with learning model. The first section develops a dynamic model combining asset accumulation and learning to explain the parents’ forward-looking saving behavior when they are...

To counteract the financial pressure emerging in aging societies, statutory pay-as-you-go pension schemes are undergoing fundamental reforms in many Western countries. Starting with cohort 1937, Germany introduced permanent pension deductions for early retirement. This paper examines the...

This paper tests whether the Ricardian Equivalence proposition holds in a life cycle consumption laboratory experiment. This proposition is a fundamental assumption underlying numerous studies on intertemporal choice and has important implications for tax policy. Using nonparametric and panel...

We revisit the alleged retirement consumption puzzle. According to the life-cycle theory, foreseeable income reductions such as those around retirement should not affect consumption. However, we first recall that given higher leisure endowments after retirement, the theory does predict a fall of...

We quantify the importance of precautionary labor supply using data from the German Socio- Economic Panel (SOEP) for 2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married men choose about 2.5% of their hours of work or one week...