Older or Wealthier? The Impact of Age Adjustment on Cross-Sectional Inequality Measures

Ingvild Almås and Magne Mogstad

No 9/2010, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-section data, a concern is that one confuses older with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates wealth inequality due to age, yet preserves inequality arising from other factors. Using a new cross-country comparable database, we examine the impact of age adjustments on wealth inequality across countries and over time. We find that the most widely used method yield a substantially different picture of age adjusted wealth inequality than our method.

Keywords: Wealth inequality; Life cycle; Age adjustments; Gini coefficient. (search for similar items in EconPapers)
JEL-codes: D31 D63 D91 E21 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2010-03-09
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Working Paper: Older or Wealthier? The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries (2009)
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