Titelaufnahme

Titel
Insurance, redistribution, and the inequality of lifetime income / Peter Haan (FU Berlin, DIW Berlin and IZA), Daniel Kemptner (DIW Berlin), Victoria Prowse (Purdue University and IZA) ; IZA Institute of Labor Economics
VerfasserHaan, Peter In der Gemeinsamen Normdatei der DNB nachschlagen ; Kemptner, Daniel In der Gemeinsamen Normdatei der DNB nachschlagen ; Prowse, Victoria In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, January 2018
Ausgabe
Elektronische Ressource
Umfang1 Online-Ressource (40, 11 Seiten) : Diagramme
SerieDiscussion paper ; no. 11275
URNurn:nbn:de:hbz:5:2-147820 Persistent Identifier (URN)
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Insurance, redistribution, and the inequality of lifetime income [0.82 mb]
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Zusammenfassung

In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and -transfer system offsets around half of the inequality in lifetime earnings that is due to differences in skill endowments. At the same time, taxes and transfers mitigate around 60% of the inequality in lifetime earnings that is attributable to employment and health risk. Progressive taxation of annual earnings provides little insurance against lifetime earnings risk. The lifetime insurance effects of taxation may be improved by moving to a progressive tax on lifetime earnings. Similarly, the lifetime insurance and redistributive effects of social assistance may be improved by requiring wealthy individuals to repay any social assistance received when younger.