Topics in distributional analysis : the importance of intermediate institutions for income distributions, inequality and intra-distributional mobility
The unifying theme of this dissertation is the importance of intermediate institutions for income distributions, inequality and intra-distributional mobility. First, we analyse the effects of informational problems in a general equilibrium model with dynamically evolving wealth distributions. Poor agents need to borrow funds but a non-commitment problem on the capital market leads to persistent inequality. The next important institution to be examined is the tax-benefit system. The third chapter investigates the relative performance of alternative unemployment benefit regimes in a search-theoretic general equilibrium model of the labour market. Policy objectives such as the reduction in inequality or the alleviation of poverty are considered and the incentive problems are examined. Prior to the empirical analysis, the fourth chapter develops the large sample distribution of a number of inequality and mobility indices. Moreover, the relative performance of these (asymptotic) approximations and various bootstrap estimators is examined. The data is described in chapter five. The sixth chapter analyses the distributional consequences of the German tax-benefit system using the German Socio-Economic Panel. Two dimensions income dynamics are investigated by distinguishing between shape dynamics and intra-distributional mobility. The complementarity between various tools such as non-parametric stochastic kernel density estimates and transition matrices is explored. As the transition probabilities are found to be time-varying, several statistical models of income mobility are estimated (and a new mover-stayer model is proposed) in the last chapter. In order to give an economic explanation of the observed mobility patterns various duration models (with duration dependent hazards and unobserved heterogeneity) are estimated.