Economic inequality has been an important feature of the developed economies since the 1970s. Thus understanding the determinants and consequences of economic inequality is central to macroeconomics. This thesis consists of three chapters, each of which focuses on a different aspect of...

This thesis consists of three chapters, each of which focuses on different aspects of economic inequality.First, we investigate the differences in wage inequality between the United States and continental European countries (CEU). Wage inequality has been significantly higher in the US compared...

How does the persistence of earnings change over the life cycle? Do workers at different ages face the same variance of idiosyncratic earnings shocks? This paper proposes a novel specification for residual earnings that allows for an age profile in the persistence and variance of labor income...

We study the evolution of individual labor earnings over the life cycle using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations...

We study the evolution of individual labor earnings over the life cycle, using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations...

Wage inequality has been significantly higher in the U.S. than in continental European countries (CEU) since the 1970s. Moreover, this inequality gap has further widened during this period as the U.S. has experienced a large increase in wage inequality, whereas the CEU has seen only modest...

This paper studies how recessions affect individual income risk. We employ a unique and confidential administrative data set with tens of millions of observations on individual earnings histories from the Social Security Administration records. We use a dataset that is a 10% random sample of the...

The model described here provides a central role for policies and institutions that compress the wage structure. For example, unions and progressive income taxes reduce (after-tax) wages at the higher end of the wage distribution while artificially boosting them at the lower end. As a result,...

The first part of this paper estimates a set of stochastic processes with increasing generality to capture these salient features of earnings dynamics to provide a reliable "user's guide" for applied economists. In the second part, we examine if these documented features can be explained in a...

Guvenen, Karahan, Ozkan, and Song (2014) sheds new light on the nature of idiosyncratic idiosyncratic income risk. They document the following facts: First, earnings changes display extreme leptokurtosis, meaning that compared to a normal distribution (with the same standard deviation), most...