In disability insurance, the impact of the duration since the inception of disability on future recovery and mortality rates has been modeled by bivariate Markov renewal processes and the associated semi-Markov process, but these processes do not incorporate potential dependences between the...

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 the...

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...