On the persistence of income shocks over the life cycle: Evidence, theory, and implications

Karahan, Fatih; Ozkan, Serdar

doi:10.1016/j.red.2012.08.001

Cited by 102 publications

(89 citation statements)

References 36 publications

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“…However, Karahan and Ozkan (2013) also report that using data on average hourly wages does not significantly change their results: we consider these findings reassuring, and introduce this shortcut for the sake of simplicity. using Rouwenhorst's method, as suggested in Kopecky and Suen (2010).…”

Section: Calibrationmentioning

confidence: 63%

“…7 The results of Karahan and Ozkan (2013) reported above have been obtained using data on annual earnings: hence, to correctly match this empirical evidence to our model we should take the endogeneity of labor supply into account, significantly complicating the calibration process. However, Karahan and Ozkan (2013) also report that using data on average hourly wages does not significantly change their results: we consider these findings reassuring, and introduce this shortcut for the sake of simplicity.…”

Section: Calibrationmentioning

confidence: 75%

“…Borrowing the estimates provided in Karahan and Ozkan (2013), Table 3, we set ρ ε = 0.98 and σ ε = 0.11; 7 the aggregate labor endowment in steady state is normalized to one, and this implies, as already mentioned, that E (ε) = 1: we set the parameterε accordingly. This process is approximated with a 4-state discrete Markov chain computed 4 Note that if a 1 → 0, then T (y) → a 0 y, i.e.…”

Section: Calibrationmentioning

confidence: 99%

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Taxing Carbon Under Market Incompleteness

Bosetti

Maffezzoli

2013

SSRN Journal

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This paper is the first attempt, to the best of our knowledge, to study the impact of a carbon tax by means of a heterogeneous agents model. The objectives of the paper are two: i) To assess how the results of a representative agent model compare to those coming from a model accounting for heterogeneity across agents when evaluating aggregate economic and environmental impacts of a carbon tax; ii)To assess the distributional implications of a carbon tax (and equivalent cap) and how they can be mitigated through different recycling schemes or allocations.

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Section: Calibrationmentioning

confidence: 63%

Section: Calibrationmentioning

confidence: 75%

Section: Calibrationmentioning

confidence: 99%

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Taxing Carbon Under Market Incompleteness

Bosetti

Maffezzoli

2013

SSRN Journal

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“… Regarding income inequality, skill-biased technical change (Acemoglu, 2002), increased global trade (Feenstra andHanson, 2004), de-unionisation (Card, 2001;Jaumotte and Osorio Buitron, 2015), and population ageing (Heathcote et al, 2010;Karahan and Ozkan, 2013) have been identified as causal factors. The increase in post-tax income inequality also reflects the decline in top marginal personal income tax rates.…”

Section: Trends Causes and Consequences Of Inequalitymentioning

confidence: 99%

Monetary Policy and Inequality

O'Farrell

Rawdanowicz

Inaba

2016

OECD Economics Department Working Papers

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JT03390505Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2016)5 UnclassifiedEnglish -Or. English ECO/WKP(2016)5 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to the Economics Department, OECD, 2 rue André-Pascal, 75775 Paris Cedex 16, France, or by e-mail to eco.contact@oecd.org.All Economics Department Working Papers are available at www.oecd.org/eco/workingpapers. © OECD (2016)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP(2016)5 3 ABSTRACT/RÉSUMÉ Monetary Policy and InequalityThis paper analyses two-way interactions between monetary policy and inequality in selected advanced economies. In the context of a highly accommodative monetary stance over recent years, the analysis focuses on the effects of monetary policy on inequality over the business cycle via its impacts on returns on assets, the cost of debt servicing and asset prices. While monetary policy easing has a priori ambiguous effects on income and net wealth inequality, in practice these effects are estimated to be small. Cross-country differences in the size and distribution of income and net wealth explain contrasting effects. A house price increase generally reduces net wealth inequality, while the opposite is true for increases in equity and bond prices. Higher inequality can reduce the effectiveness of monetary policy stimulus in boosting private consumption, but such effects are estimated to be small. Cross-country differences in the size and composition of household financial assets rather than in their distribution are more relevant for differences in the effectiveness of monetary policy, especially via the wealth channel. JEL classification codes: D31, D63, E21, E3, E5.Key words: income inequality, net wealth inequality, monetary policy, consumption wealth effects. ******************** Politique monétaire et inégalitésLe présent article a pour objet d'analyser les interactions réciproques entre la politique monétaire et les inégalités dans certaines économies avancées. Dans le contexte d'une politique monétaire très accommodante au cours des dernières années, l'ana...

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“…The redistribution component is then mostly pinned down by difference in the welfare weights on different income levels at a young age. We calibrate the model based on recent estimates of income risk parameters, which are allowed to condition on age, providing a realistic life-cycle structure for the evolution of income risk (Karahan and Ozkan 2013). Interestingly we find numerically that for our benchmark calibration the redistribution and insurance component 1 See, e.g., Piketty (1997), Diamond (1998) and Saez (2001) or Piketty and Saez (2013a) for a recent survey article.…”

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confidence: 97%

Redistribution and insurance with simple tax instruments

Findeisen

Sachs

2017

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear capital tax is non-zero and trades off redistribution and insurance against savings distortions. Terms of use: Documents inOur quantitative results reveal that the insurance component contributes significantly to optimal labor tax rates and provides an informative lower bound on optimal taxes: even for welfare functions that do not value redistribution, marginal tax rates are positive for all income levels. Optimal capital taxes are significant and yield sizable welfare gains; in particular if labor income taxes are suboptimal.JEL-Code: H210, H230.

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On the persistence of income shocks over the life cycle: Evidence, theory, and implications

Cited by 102 publications

References 36 publications

Taxing Carbon Under Market Incompleteness

Taxing Carbon Under Market Incompleteness

Monetary Policy and Inequality

Redistribution and insurance with simple tax instruments

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