Title of article
Politico-economicconsequencesofrisingwageinequality$
Author/Authors
Dean Corbae، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
19
From page
43
To page
61
Abstract
This paperusesadynamicpoliticaleconomymodeltoevaluatewhethertheobserved
rise inwageinequalityanddecreaseinmediantomeanwagescanexplainsomeportion
of therelativeincreaseintransferstolowearningsquintilesandrelativeincreasein
effectivetaxratesforhighearningsquintilesintheU.S.overthepastseveraldecades.
Specifically,weassumethathouseholdshaveuninsurableidiosyncraticlaborefficiency
shocks andconsiderpolicychoicesbyamedianvoterwhicharerequiredtobe
consistent withasequentialequilibrium.Wechoosethetransitionmatrixtomatch
observedmobilityinwagesbetween1978and1979inthepanelstudyofincome
dynamics(PSID)datasetandthenevaluatetheresponseofsocialinsurancepoliciestoa
new transitionmatrixthatmatchestheobservedmobilityinwagesbetween1995and
1996andisconsistentwiththeriseinwageinequalityandthedecreaseinmedianto
mean wagesbetween1979and1996.Wedealwiththeproblemthatpolicyoutcomes
affecttheevolutionofthewealthdistribution(andhenceprices)byapproximatingthe
distributionbyasmallsetofmoments.Wecontrastthesenumberswiththosefroma
sequentialutilitarianmechanism,aswellasmechanismswithcommitment
Keywords
Median votermodelIncomplete marketsWageinequalityTaxpolicyRedistribution
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846273
Link To Document