Giacomo Corneo (Freie Universität Berlin) on "Lifetime inequality and redistribution in Germany"

We employ German social security records and a comprehensive microsimulation model to investigate intra-generational lifetime income inequality and redistribution at the level of birth-year cohorts, starting with those born in 1935. We detect a striking secular rise of lifetime income inequality, both pre-fisc and post-fisc. On entire life-cycles, the German tax-transfer system is found to be progressive and generating substantial effects on the disposable incomes of the two extreme deciles of the lifetime income distribution. Governmental lifetime income redistribution displays an inverted-U shape over cohorts and is significantly smaller than on an annual basis. Differential mortality increases lifetime income inequality by about 5 %. We develop a money-metric welfare measure that takes the value of greater longevity into account. We find that differential mortality increases lifetime welfare inequality by about 12%.