The Role of Employment and Redistribution for Lifetime Income Inequality in Denmark

Jonas Maibom, Trine Schack and Rune Vejlin

No 13072, CESifo Working Paper Series from CESifo

Abstract: Using Danish administrative data from 1980–2023, we analyze lifetime income (both earnings and net-income) inequality and its evolution across cohorts. Earnings inequality rises with age from midlife onward and is highest among the low educated and lowest among those with medium education. Differences in employment attachment — such as non-employment and part-time work — account for 30–60 percent of lifetime earnings dispersion, and are particularly important among the low educated. Weak employment attachment is a key driver of lifetime earnings inequality and is closely linked to exposure to adverse shocks such as unemployment and health-related events. Lifetime earnings inequality has risen across cohorts among the low educated, partly through growing dispersion in employment attachment. In moving from earnings to net-income, transfers account for roughly five times as much of the inequality reduction as taxes, but this equalizing effect has weakened over time. Our results highlight the role of employment dynamics and social insurance for lifetime inequality.

Keywords: lifetime earnings inequality; employment attachment; income redistribution; tax and transfer system (search for similar items in EconPapers)
JEL-codes: D31 H24 J31 J64 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_13072

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