This paper investigates the importance of heterogeneity in the labor earning shock processes. We analyze the earning shock process for both male and female workers in several countries. We argue that unlike time series analysis, in a life cycle model the forecasting horizon is finite and in...

What are the principal sources of posttax-posttransfer inequality in affluent countries? To what extent do inequality of individual earnings, inequality of market household incomes, redistribution, and other factors influence the posttaxposttransfer income distribution? And what do the answers...