This paper investigates to what extent preference heterogeneity helps account for two observations that challenge standard life-cycle theory: (i) The richest 1% of households hold at least 25% of total wealth. (ii) Households with similar lifetime earnings hold very different amounts of wealth....

A large empirical literature investigates the link between "openness" and growth. Cross-country observations suggest that (i) "openness" enhances growth by increasing a country's rate of investment, and (ii) variables related to equipment investment are robustly and strongly correlated with...

Immigration in the United States is characterized by a number of empirical regularities. Immigrants cluster geographically and are often employed together. Immigrant earnings differ by origin, even after controlling for education and experience. A large fraction of immigrants eventually returns...

College admissions are highly meritocratic in the U.S. today. It is not the case in many other countries. What is the tradeoff? On one hand, meritocracy produces more human capital overall if higher ability students learn more in college and if they learn more in higher quality colleges. This...

This paper studies quantitative importance of accidental versus intended bequests. Bequests are decomposed into accidental and intended components by comparing the implications of a standard life-cycle model under alternative assumptions about bequest motives. The main finding is that accidental...

This paper proposes a new method for estimating the intergenerational persistence of lifetime earnings from data that contain only short sections of individual earnings histories. The approach infers lifetime earnings persistence from the persistence of short earnings averages together with...

The life-cycle model is a standard theoretical framework for studying savings and wealth inequality. This paper shows that life-cycle models have difficulties accounting for the empirical relationship between lifetime earnings and household wealth. Quantitative life-cycle models imply a far...

A number of recent papers have investigated the growth effects of tax reforms in the context of neoclassical growth models where growth is due to human capital accumulation. Stokey and Rebelo (1995) show that the predicted growth effects disagree to a striking extent and are highly sensitive to...