We examine the determinants of income mobility and inequality in a Ramsey model with elastic labor supply and heterogeneous wealth and ability (labor endowment). Both agents with lower wealth and with greater ability tend to supply more labor, implying that labor supply decisions may have an...

The recent debate on trends in inequality in industrial countries has been marred by the lack of consensus about the relevant concept of inequality. Labour economists are concerned with inequality in earnings, macroeconomists with movements in the wage share, while policy-makers tend to focus on...

Recent work on inequality has examined either changes in the distribution of income or in that of earnings, without examining how the latter affects the former. In this paper we perform a factor decomposition of income inequality in order to assess the importance of earnings and income from...