to 20 per cent by the omission of unobserved family background factors (i.e. family fixed effects). Surprisingly, after …

The UK has experienced a dramatic increase in earnings and income inequality over the past four decades. We use … policy shocks lead to a deterioration in earnings, income and consumption inequality and contribute to their fluctuation. The … response of income and consumption at different quantiles suggests that contractionary policy has a larger negative effect on …

We study the role of idiosyncratic income shocks for aggregate fluctuations within a simple heterogeneous household … framework with no binding borrowing constraints. We show that the presence of idiosyncratic income shocks affects the economy …'s response to an aggregate shock in a way that can be captured by a consumption weighted average of the changes in uncertainty …