This paper posits a notion of the value of an individual's human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We find that (1) the value of human capital is far below the value implied by discounting...

How will the distribution of welfare, consumption and leisure across households be affected by social security reform? This paper addresses this question for social security reforms with a two-tier structure by comparing steady states under a realistic version of the current US system and under...

A common problem in dynamic economic theory is to determine when an increase in a parameter and/or an initial condition increases the future dynamics of a theoretical economy. This paper provides conditions that are necessary and sufficient for making statements of this type. The result is...

This paper analyzes the dispersion in consumption and earnings over the life-cycle. We first reexamine these facts by considering US data for the period (1980-2000) using alternative price deflators. We find that consumption and earnings dispersion increase with age, but that the increase in...

Is lifetime inequality mainly due to differences across people established early in life or to differences in luck experienced over the working lifetime? We answer this question within a model that features idiosyncratic shocks to human capital, estimated directly from data, as well as...

Is lifetime inequality mainly due to differences across people established early in life or to differences in luck experienced over the working lifetime? We answer this question within a model that features idiosyncratic shocks to human capital, estimated directly from data, as well as...

A common problem in dynamic economic theory is to determine when an increase in a parameter and/or an initial condition increases the future dynamics of a theoretical economy. This paper provides conditions that are necessary and sufficient for making statements of this type. The result is...

How far is the US social insurance system from an efficient system? We answer this question within a model where agents receive idiosyncratic, labor-productivity shocks that are privately observed. When social security and income taxation comprise the social insurance system, the maximum...