TY - JOUR
T1 - Sources of lifetime inequality
AU - Huggett, Mark
AU - Ventura, Gustavo
AU - Yaron, Amir
PY - 2011/12
Y1 - 2011/12
N2 - 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 heterogeneity in ability to learn, initial human capital, and initial wealth. We find that, as of age 23, differences in initial conditions account for more of the variation in lifetime earnings, lifetime wealth, and lifetime utility than do differences in shocks received over the working lifetime.
AB - 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 heterogeneity in ability to learn, initial human capital, and initial wealth. We find that, as of age 23, differences in initial conditions account for more of the variation in lifetime earnings, lifetime wealth, and lifetime utility than do differences in shocks received over the working lifetime.
UR - http://www.scopus.com/inward/record.url?scp=83755185511&partnerID=8YFLogxK
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U2 - 10.1257/aer.101.7.2923
DO - 10.1257/aer.101.7.2923
M3 - Article
AN - SCOPUS:83755185511
VL - 101
SP - 2923
EP - 2954
JO - American Economic Review
JF - American Economic Review
SN - 0002-8282
IS - 7
ER -