DP15166 Consumption and Income Inequality across Generations
|Author(s):||Giovanni Gallipoli, Hamish Low, Aruni Mitra|
|Publication Date:||August 2020|
|Keyword(s):||Consumption, Income, inequality, Intergenerational Persistence|
|JEL(s):||D1, D64, E24|
|Programme Areas:||Labour Economics, Public Economics, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15166|
We characterize the joint evolution of cross-sectional inequality in earnings, other sources of income and consumption across generations in the U.S. To account for cross-sectional dispersion, we estimate a model of intergenerational persistence and separately identify the influences of parental factors and of idiosyncratic life-cycle components. We find evidence of family persistence in earnings, consumption and saving behaviours, and marital sorting patterns. However, the quantitative contribution of idiosyncratic heterogeneity to cross-sectional inequality is significantly larger than parental effects. Our estimates imply that intergenerational persistence is not high enough to induce further large increases in inequality over time and across generations.