Parental Priorities and Economic Inequality

by Casey B. Mulligan

Chapter V

Taxation and Intergenerational Mobility in the Three Models

Chapter V extends the three models to understand the effects of government attempts to redistribute resources from rich to poor. The results there are interesting because they speak to policy questions such as "How does government redistribution affect inequality?" I argue that progressive estate and income taxes are likely to reduce consumption inequality and increase intergenerational consumption mobility, but actually increase earnings inequality. The results also suggest that some, but by no means all, observed intergenerational mobility in the U.S. can be attributed the progressivity of estate and income tax codes in place there.

© copyright 1996, Casey B. Mulligan.