Insurance, redistribution, and the inequality of lifetime income

Peter Haan, Daniel Kemptner, Victoria Prowse, Maximilian Schaller

Individuals vary considerably in how much they earn during their lifetimes. This study examines the role of the tax-and-transfer system in mitigating such inequalities, which could otherwise lead to disparities in living standards. Utilizing a life-cycle model, we determine that taxes and transfers offset 45% of lifetime earnings inequality attributed to differences in productive abilities and education. Additionally, the system insures against 48% of lifetime earnings risk. Implementing a lifetime tax reform linking annual taxes to previous employment could improve the system's insurance capabilities, albeit at the cost of a lower employment rate.

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Year of publication:	[2023]
Authors:	Haan, Peter ; Kemptner, Daniel ; Prowse, Victoria ; Schaller, Maximilian
Publisher:	[London] : Institute for Fiscal Studies
Subject:	Lifetime earnings \| lifetime income \| tax-and-transfer system \| taxation \| unemployment insurance \| disability benefits \| social assistance \| inequality \| redistribution \| insurance \| education \| productive ability \| risk \| dynamic life-cycle models \| Umverteilung \| Redistribution \| Lebenseinkommen \| Lifetime income \| Arbeitslosenversicherung \| Unemployment insurance \| Theorie \| Theory \| Öffentliche Sozialleistungen \| Social security benefits \| Erwerbsminderungsrente \| Disability benefits \| Lebenszyklus \| Life cycle \| Einkommensverteilung \| Income distribution

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Extent:	1 Online-Ressource (circa 71 Seiten) Illustrationen
Series:	Working paper. - [London] : [IFS, Institute for Fiscal Studies], ZDB-ID 3033083-X. - Vol. 23, 33
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	10.1920/wp.ifs.2023.3323 [DOI] hdl:10419/284259 [Handle]
Classification:	D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; i24 ; I38 - Government Policy; Provision and Effects of Welfare Programs ; J22 - Time Allocation and Labor Supply ; J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10014419242