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Gender wage inequality is persistent across contexts and time, with women earning less than men, even when controlling for factors such as job role, experience, and performance metrics. Recent research has highlighted that gender wage inequality does not just arise from differences in base wages, but also from additional compensation. In this article we contribute to this literature by studying gender wage inequality in a specific form of performance pay: bonus compensations, that are handed out mostly at the end of the calendar year and are based on workers’ (perceived) contributions to firms. While studies have shown that there are cross-sectional differences in the extent to which men and women receive bonuses, we do not know where these differences come from: is there within-firm inequality in the extent to which men and women receive bonuses, or do women sort into firms where bonuses are lower (or less often handed out)? We leverage unique longitudinal data from the Dutch population registers (2013-2023) that allow for tracking all workers monthly and contain administrative information on all wages and bonus payments without censoring. Our preliminary results show large gender inequality in bonus payments, even among workers with similar wages in the same firm. This inequality in bonus compensation is driven by both driven by within- and between-firm (i.e., sorting) processes.

In economics a large literature has studied sexual minorities (e.g., lesbian, gay, and bisexual people) and a smaller literature has studied gender minorities (e.g., nonbinary and transgender people). We are the first to study the employment and earnings intersections of sexual minority status with gender minority status. We link the 2023 New Zealand (NZ) Census – which asked questions about both sexual orientation and gender identity to all adults – to administrative earnings records. These data replicate patterns in the prior literature: sexual minorities earn less than similarly situated heterosexual individuals, and non-cisgender individuals earn less than comparable cisgender men. We report several new findings. First, we document a significant earnings penalty experienced by individuals whose sexual orientation is ‘not elsewhere classified’ (including people who would use the term ‘queer’). Second, we find a large ‘double disadvantage’ in employment and earnings for nonbinary people who are also sexual minorities. Third, we find that failing to control for sexual minority status masks large heterogeneity in transgender men’s earnings penalty. Our results highlight the importance of accounting for sexual minority status in the emerging economics literature on gender minorities, especially nonbinary people.

Children who grow up in poverty in the United States face a significantly higher risk of adult poverty compared to their peers in other wealthy nations. This study uses 50 years of data from the Panel Study of Income Dynamics to investigate whether the expansion of the American welfare state has successfully weakened this intergenerational link. I begin by distinguishing the statistical properties of the intergenerational persistence of poverty (IGPov) from conventional mobility metrics, such as rank-rank slopes and intergenerational elasticities, showing that IGPov combines material concerns (prevailing poverty rates) with fairness considerations (the relative persistence of poverty). Despite substantial policy changes and declining child poverty rates in recent decades, I document that high rates of poverty persistence in the U.S. have remained stagnant over the past half-century. Beneath that stability, however, lie diverging mobility patterns by gender and race/ethnicity. Finally, I show that the mechanisms behind intergenerational poverty differ from standard mobility measures, with employment being far more important than education in linking childhood poverty to adulthood poverty. Aside from reducing poverty rates through direct taxes and transfers, reducing differences in adulthood employment rates for those from high-poverty backgrounds relative to adults from low-poverty backgrounds is the most direct route toward reducing the intergenerational persistence of poverty.

The Means of Prediction offers a powerful vision of the future of AI: a future not shaped by technology, but by the technology’s owners. Amid a deluge of debates about technical details, new possibilities, and social problems, Kasy cuts to the core issue: Who controls AI’s objectives, and how is this control maintained? The answer lies in what he calls “the means of prediction,” or the essential resources required for building AI systems: data, computing power, expertise, and energy. As Kasy shows, in a world already defined by inequality, one of humanity’s most consequential technologies has been and will be steered by those already in power.

Against those stakes, Kasy offers an elegant framework both for understanding AI’s capabilities and for designing its public control. He makes a compelling case for democratic control over AI objectives as the answer to mounting concerns about AI’s risks and harms. The Means of Prediction is a revelation, both an expert undressing of a technology that has masqueraded as more complicated and a compelling call for public oversight of this transformative technology.

This study uses a large, nationally representative online survey in Chile comparing double list experiments – which reduce social desirability bias – with direct questions on attitudes among supervisors, co-workers, and customers toward sexual minority individuals. Respondents underreported their discomfort with gay individuals by 15-23 percentage points, with the largest bias and lowest comfort levels observed when asked about supervising gay employees. These patterns were mirrored in incentivized donation behavior: individuals who refused to donate in a lottery to LGBTQ-related nonprofits reported lower comfort levels and exhibited greater misreporting. Finally, respondents consistently underestimated the broader societal support for gay employees and co-workers.

This paper examines the causal effect of high school majors on cognitive skills. We compare students just above and below GPA admission cutoffs using a regression discontinuity design and find that fields of study at age 16 impact cognitive skills around age 18. Admission to STEM relative to non-academic programs raises both crystallized and fluid cognitive skills by about 0.05 standard deviations, while admission to business, social sciences, and humanities (BSH) relative to STEM lowers both by 0.10 standard deviations. Analyses of test components indicate that STEM programs particularly foster spatial reasoning and technical problem-solving skills.

Co-Authors: Eppie van Egeraat and Alexander Willen 

We use population-wide Norwegian administrative data to construct a multidimensional measure of dynastic social capital—elite education, occupational prestige, organizational and corporate leadership, and residence in high-price neighborhoods—and examine how it is transmitted across generations. Social capital is strongly persistent across generations and strongly predicts children’s long-run earnings and access to elite positions, even after conditioning on parental income, education, and cognitive ability. Incorporating social capital into standard mobility regressions reduces estimated income-based persistence by more than half, indicating that a substantial share of intergenerational inequality reflects inherited social positions rather than financial resources alone. The influence of social capital grows over the life cycle and has a particularly large effect on becoming a top earner. Quasi-experimental evidence from adoption placements and parental lottery wins shows that these patterns reflect environmental transmission rather than genetic inheritance or direct income effects. Together, the findings reframe intergenerational mobility as a process shaped not only by inherited resources and skills, but also by durable social positions transmitted across generations.

The share of aggregate income earned by labor has been declining in several high-income countries. This conflicts with a macroeconomic production function that is Cobb-Douglas, which was initially motivated by Kaldor's growth fact of a constant labor share. To reconcile the aggregate production function with declining labor shares and increasing capital-output ratios, some researchers have suggested that capital can easily substitute labor. This, in turn, contradicts the vast econometric evidence that suggests capital and labor are gross complements.

This paper introduces factor-biased technological change into a constant elasticity of substitution (CES) production function and shows how recent developments of the labor share can be reconciled with a reasonably calibrated CES when the substitution elasticity of capital and labor is low (σ ≈ 0.6). Empirically plausible calibration allows me to estimate the direction of technical change. The results suggest that all technological progress in the US over the last decades was labor-saving. This supports the idea that technological change in capital-rich countries is directed towards labor when production factors are complements.

This paper examines how digital technological change affects labor market outcomes in an economy with a large vocational education and training (VET) system, using Austria as a case study. We combine Austrian administrative data with firm-level investment records and a novel sectoral measure of exposure to emerging digital technologies based on global patent activity. Using a shift–share design across Austrian labor market districts from 2012 to 2019, we estimate the impact of digitalization on employment and earnings. We find small but negative average effects of digital technology exposure on employment and income. These effects are driven by workers with low and higher education, while vocationally trained workers are largely unaffected. This pattern holds across genders, sectors, and fields of study, indicating that vocational education shields workers from the adverse effects of technological change.

Co-Authors: Diego Battiston and Martin Friedrich

We study differential wage growth across firms. To this end, we propose a statistical model that extends the workhorse model of wage determination by Abowd et al. (1999) to allow for firm-type-specific wage growth. We estimate the model using linked employer-employee data from Germany for the years 1996 to 2016. We show that wage growth differs across firms and that these differences can at least partially be explained by differential human capital accumulation. Workers keep the additional accumulated pay when switching firms. This has important considerations for our understanding of the sources of wage inequality. We show that the presence of firm-type specific wage growth biases the variance and sorting components of the AKM model. The dispersion of worker quality and sorting is less important in explaining wage inequality than previously thought.

Should governements tax different assets at different rates? The answer depends crucially on the cross-elasticities between asset classes, of which few estimates exist. This paper estimates the cross-elasticity between the two main components of household wealth: financial and real estate assets. In 2017, France transformed its wealth tax into a real estate tax, thereby eliminating wealth taxation on financial assets. Using comprehensive linked administrative income and wealth data from France, I study the effect of this unique reform by contrasting the responses of French residents to non-residents, who remained subject to the wealth tax but were unaffected by the reform. Five years after the reform, French taxpayers have reallocated on average 5% of their real estate holdings toward financial assets. These responses translate into a quite modest cross-elasticity: a one percentage point differential increase in the tax rate on real estate causes taxpayers to reallocate 4.7% of their real estate assets to financial assets. This reallocation is driven by reduced ownership in investment properties rather than owner-occupied housing, and coincides with a surge in dividend incomes. Overall, I estimate that behavioral responses account for approximately 7% of the revenue loss due the reform, indicating that the mechanical impact dominates. These findings have two key implications. First, from an equity perspective, exempting financial assets from wealth taxation primarily served as a tax cut for wealthy households in France. Second, the efficiency cost of taxing real estate more heavily than other assets appears limited.

To attract more female talent to male-dominated fields, companies have promoted gender-targeted programs. Yet, such efforts could backfire if they trigger a negative response among men. We study this possibility in a randomized controlled trial among 8th grade students in Switzerland, prior to choosing a training occupation. Students in the treatment group watched two videos emphasizing firms' desire to recruit girls into tech occupations and to promote equal career opportunities for women in management positions. We measure effects on students’ career aspirations and on sabotaging behavior in incentivized games. Results show that students understood the message that companies promote women. We find no evidence of backlash from boys against girls. We also find no effect of the treatment on girls’ or boys’ interest in receiving more information or pursuing the promoted occupations. These findings suggest that while gender-targeted promotion does not deter boys, it may not be sufficient to change career intentions either.

Co-Author: Juan Carlos Escanciano

Equality of opportunity has emerged as an important ideal of distributive justice. Empirically, Inequality of Opportunity (IOp) is measured in two steps: first, an outcome (e.g., income) is predicted given individual circumstances; and second, an inequality index (e.g., Gini) of the predictions is computed. Machine Learning (ML) methods are tremendously useful in the first step. However, they can cause sizable biases in IOp since the bias-variance trade-off allows the bias to creep in the second step. We propose a simple debiased IOp estimator robust to such ML biases and provide the first valid inferential theory for IOp. We demonstrate improved performance in simulations and report the first unbiased measures of income IOp in Europe. Mother’s education and father’s occupation are the circumstances that explain the most. Plug-in estimators are very sensitive to the ML algorithm, while debiased IOp estimators are robust. These results are extended to a general U-statistics setting.

Co-Author: Jacob Hacker

In July 2026, Congressional Republicans and President Trump passed the One Big Beautiful Bill Act (OBBBA), the most regressive piece of U.S. tax and budget legislation in living memory. Combining large tax cuts that disproportionately flowed to the rich with significant cuts to Medicaid (a public health insurance program), the Affordable Care Act, and food assistance, the bill was massively unpopular. Among high-profile bills of the last generation, only the failed effort to retrench the Affordable Care Act in 2017 garnered greater opposition. And yet, the OBBBA is now public law. In this paper, we ask why. We resist arguments that see President Donald Trump as so overarchingly powerful that congressional Republicans would barrel forward no matter what. Trump’s pressure was crucial, but a critical precondition for it to matter was Republicans’ ability—through both rhetoric and policy design—to draw attention to putatively populist economic provisions in their bill and to downplay and obscure its most regressive components. Using both original experimental survey results and analysis of Republican rhetoric and media coverage of the debate, we show that Republicans successfully highlighted fiscally trivial yet popular elements such as “No tax on tips” or “No tax on overtime.” Equally important, they adapted the design and presentation of their health care cuts to reflect hard lessons they had learned in 2017. As substantial as public opposition was, we show it would have much greater and more bipartisan without these (deceptive) framings and design choices. We close by considering whether these factors will insulate Republicans against future electoral risks.

Co-Authors: Marco Fongoni, Sofie R. Waltl, Nikola Kilzer, Jasper Hepp

This article provides new laboratory evidence on the interplay between social comparison, procedural fairness and employees’ morale and effort. We propose a new design which enables us to: i) isolate the effect of wage inequality on effort from other confounding factors that are present in previous experiments, such as piece-rate incentives or gift-exchange; ii) understand the mediating role of procedural fairness, that is, whether wage inequality based on merit is considered to be more acceptable by employees. We find that employees respond more strongly to disadvantageous wage inequality by decreasing their effort relative to their high-paid peers, and that the strength of this response is correlated with loss aversion. However, we also find that if wage inequality is the outcome of ex ante differences in employees’ ability (i.e., it is justified), its effect on morale and effort disappear. We conclude that transparency and fair procedures can help mediate the adverse effect of wage inequality in the workplace.

Co-Authors: Alejandra Campos (Columbia), Yyannu Cruz-Aguayo (IADB), Carolina Echeverri (University of Minnesota), Norbert Schady (World Bank)

The quality of the interaction between a teacher and her students can be assessed through classroom observations, in which observers measure the extent to which a teacher engages in classroom behaviors that educators and educational psychologists believe to be conducive to learning. Using an experiment where i) students are randomly assigned to different teachers in each year of elementary school, ii) students are tested annually in math, language and executive function (EF), and iii) teachers are filmed for a day (from which the quality of their classroom interactions can be measured), we estimate the impact of being sequentially exposed to different levels of quality of interactions during the first 5 years of schooling. We show that: 1) teachers’ quality, as assessed by the quality of interactions with students, impacts their students’ achievement not only in math, language, but also in EF; 2) these impacts are small but persistent; 3) impacts are similar across grades; 4) teacher quality is perfectly substitutable across grades.

Co-Authors: Daniel Fernandez and Caue Dobbin

We challenge the prevailing view that the negative correlation between firm quality and separation rates is driven by efficient separations, with no distinction between quits and layoffs. Using administrative data from Brazil, we show that this correlation is primarily driven by lower layoff rates at high-quality firms, rather than differences in quits. To explain this pattern, we develop a parsimonious job search model that incorporates wage rigidity and productivity uncertainty, which interact to generate inefficient layoffs that decline with firm quality. We then introduce a novel metric of wage rigidity—based on the ratio of contracted to variable pay—and empirically validate the mechanism proposed by our theoretical framework. Our findings contribute to the growing evidence that inefficient separations play a central role in shaping labor market outcomes.

This paper examines the long-term impacts of early childhood pollution exposure by exploiting the sharp decrease in acid rain in Norway after the enactment of the Convention on Long-Range Transboundary Air Pollution. We combine a difference-in-differences and a movers' design to analyze the outcomes between cohorts born in municipalities before and after a significant decrease in pollution exposure relative to those same cohorts born in municipalities with little initial exposure. Our findings indicate that higher pollution levels are linked to lower academic performance, with children being most vulnerable to pollution exposure during early childhood.

Co-Authors: Paolo Ghinetti, Simone Moriconi, Costanza Naguib, Michele Pellizzar

We study the choice of acquiring STEM and non-STEM college education using variation induced by the proximity to universities offering different types of programs. We adopt a novel methodology allowing the identification of the distribution of response types and treatment effects in a multiple unordered discrete choice setting (Heckman and Pinto, 2018). The empirical analysis is based on confidential survey data for Italy, combined with administrative information about the founding dates of all Italian universities and faculties. We find that most compliers are women at the margin of choosing STEM education versus not going to college. We simulate the effects of expanding the supply of STEM education and discover that, in addition to substantial effects on employment, the gender disparity in STEM education could potentially decrease by up to 20%.

This paper examines the relationship between wealth inequality and ethnic conflict in the German regions of Czechoslovakia (the so-called Sudetenland) during the interwar period. We utilise unique data on wealth inequality at the county level, along with measures of political preferences and social cleavages from parliamentary elections. We demonstrate that high wealth inequality correlated with increased vote shares for German nationalists. To address possible endogeneity concerns, we employ an instrumental variable approach based on the pre-WWI significance of land in the wealth portfolio across the wealth distribution. We interpret the results within the framework of two-issue political competition where class and ethnic divisions intersect. We hypothesise that the wealthy elites supported nationalists to counter socialist demands.

Co-Authors: Alice Kügler and Uta Schönberg

We investigate the consequences of structural change for workers displaced from the manufacturingsector. Manufacturing establishments traditionally employed low- and high-wage workers in similarproportions and paid substantial wage premiums to both types of workers. Structural change has ledto the disappearance of these jobs, particularly for low-wage workers. Decomposing displacementwage losses, we show that low-wage workers suffer considerable losses in establishment premiumsfollowing displacement, whereas high-wage workers tend to fall down the match quality ladder. Withongoing structural change, losses in wages and establishment premiums have increased over time,especially for low-wage workers, in part because they are increasingly forced to switch to low-knowledge service jobs where establishment premiums are low. Our findings further highlight thatstructural change and layoffs in manufacturing have significantly contributed to job polarization andthe rise in assortative matching of workers to firms.

Are children of high-income families more likely to work at better-paying firms, and if so, why? This paper examines the role of one key potential explanation: differences in social networks. To do so, we use Canadian administrative data to construct an employee-employer-parent-child matched dataset, which we link to detailed educational records. We first show that, in an accounting sense, access to high-paying employers explains roughly half of the transmission of income across generations, as measured by the income rank-rank relationship. We then leverage rich education data to identify the impact of social connections on the probability of working at a given firm by comparing people who have the exact same degree but not the same connections. We find parental connections alone explain 10% of the firm-sorting component of intergenerational income rank-rank relationship. Finally, firm performance declines when parent business owners hire their own children, suggesting these children receive preferential treatment.

Centuries before the demographic transition, the European Marriage Pattern (EMP) limited fertility in Western Europe through high celibacy, late age at first marriage, and nuclear household structures. This paper uncovers an institutional factor that shaped the EMP: inheritance customs. We construct a novel atlas of 200 local inheritance customs in pre-industrial France and Belgium and examine individual-level marriage decisions from genealogical records of 53,672 women born in 1670–1750. We document two facts about the EMP: a substantial amount of local variation in its prevalence, and a U-shaped relationship between access to inheritance, women’s economic opportunities, and celibacy. This is consistent with inheritance customs affecting marriage decisions through women’s empowerment and eased financial constraints to form a household. These two channels allow to reconcile conflicting findings on the relationship between the EMP and economic development.

While social skills seem to gain importance in the workplace, other skills may become less relevant. The evolution in skill demand and supply directly affects wage returns to skills over time. However, estimating returns to skills is challenging: a potential bias comes from unmeasured ability differences, and there is an indirect return through college. This paper estimates direct and indirect returns to skills, controlling for unmeasured ability differences, using a novel dynamic model with endogenous cognitive, social, and diligence skills. In Germany, across recent cohorts, returns to social skills grew by 6 percentage points across cohorts. Due to routine task displacement and sorting into routine-intensive occupations, returns to diligence skills for low-cognitive individuals dropped by 10 percentage points.

Co-authors: Kai Liu, Kjelll G. Salvanes

How does a large structural change to the labor market affect education investments made at young ages? Exploiting differential exposure to the national decline in routine-task intensity across local labor markets and using population wide panel data, we show that the secular decline in routine tasks causes upskilling among high school students, with a decrease in vocational-trades and in dropout, along with increases in college. Low school performers and low-SES students are the most responsive and, as a result, intergenerational mobility in college education increases. Routine-biased technical change impacts the supply of skills of the next generation.

Effect heterogeneity is central for social mobility research, focusing on whether subgroups have converging or differential mobility rates. Still, standardized approaches are lacking, and conventional methods suffer from drawbacks – e.g., covariate imbalance and overfitting. I propose a three-stage evaluation process that uses prediction methods, complementing conventional examinations of group mean and effect differences, that allows for gauging subgroup-specific changes in explanatory power. The analytical framework additionally focuses on identifying what heterogeneity components (parental SES, gender, or migration background) drive any differences produced. While drawing on traditional subgroup analysis and intersectionality theory, the empirical focus is on universality vs. interactive models of social mobility using detailed Swedish register and census data. Although the conventional interpretation of interactive models shows strong support for subgroup heterogeneity and varying social mobility rates, predictive results indicate minimal improvements in fit and little support for an effect heterogeneity by parental SES. In sum, the interpretation of coefficients and graphical analysis of interactions can be contextualized by expanding the criteria for assessing subgroup heterogeneity. Ultimately, this leads to a better understanding of subgroup particularities, guiding future research toward richer answers with a focus on both effect estimates and how well competing models fit the data.

Co-Authors: Rinni Norlinder, J. Lucas Tilley, and Emma von Essen

Until 2013, Sweden required transgender people to undergo sterilizing surgery before changing their legal gender. We analyze whether the removal of this requirement led to an increase in the number of people changing legal gender, and if dropping the requirement had an impact on health and earnings among those who did so. Our analysis uses population-wide administrative data from 2006 to 2020, including information on legal gender changes, medical records, and socioeconomic traits. We find that 3-4 times as many people changed legal gender, and 30% of trans women and 55% of trans men chose not to have surgery within 5 years when it was no longer mandated. We also find positive effects on earnings growth and a lower rate of sick leave.

Genetic endowments are fixed at conception, and they remain constant over the life course of individuals. Therefore, genetic inequality contradicts the widespread goal of providing equal educational opportunities to all members of society. In line with this policy goal, there is a long-standing literature in economics, sociology, and psychology that poses “the question of how well schools reduce the inequity of birth” (Coleman et al., 1966, p.36). In this paper, we investigate the question of how well schools address inequalities based on genetic disadvantages by providing the first causal study to estimate the interaction between genetic endowments and school quality. To this end, we combine Norwegian data on genetic trios (mothers, fathers, fathers) with validated measures of school value-added. Our (preliminary) findings suggest that schools equalize opportunities by reducing genetic gradients in reading (but not numeracy).

While previous research has shown that disadvantaged young people are less likely to work in professional occupations than their advantaged peers, even conditional on their education, until now little has been known about the reasons for this - are they applying for professional entry-level roles and not being hired, or are they not applying in the first place? Using unique recruitment data from 17 large employers' graduate programmes, we are able to answer this question for the first time. We find that applicants from lower SEB groups and ethnic minority groups are well represented among the applicant pool, but disproportionately do not receive job offers, even when considering applicants with similar prior attainment and other demographic characteristics applying to similar roles. Around half of the gap in job offers between working class and professional background applicants appears during the application sift and online test phase of the process. The other half of the gap in offers emerges at the face-to-face stages. For ethnic minority groups, the majority of the gap in offer rates emerges at the application sift and online test phase, rather than at the face-to-face stage. Women are typically underrepresented in the applicant pool across entry routes but are more likely to achieve a job offer than otherwise similar men, among those who do apply.

Apprenticeships play a key role in enabling successful school-to-work transitions in many countries but, in the presence of imperfect information, the specificity of this type of training may entail important costs for those working outside their training fields. I study this issue in one of the most prominent training settings, the German apprenticeship system. Using administrative data and a broad occupational classification, I find that 40% of individuals work in occupations different from their training. I estimate the cost of mismatch using vacancy instruments and extend methodological approaches in high-dimensional selection settings. Lacking training in one’s occupation entails an average wage penalty of 14%, the equivalent of two years of work experience. The penalty increases with the task distance between training and occupation. My findings suggest that retraining is crucial to mitigate the adverse consequences from imperfect information in specialized training settings.

Co-Authors: Erika Forsberg and Martin Nybom

To what extent does the sorting of workers across firms contribute to intergenerational persistence, and why? We show that differences in firm pay premia account for 31% of the intergenerational elasticity of earnings in Sweden, rising to 38% when including dynamic returns to firm-specific experience. Firm pay gaps open already at career start, suggesting that children from more privileged backgrounds find more favorable entry points to the labor market. Their pay advantage widens further in early career as they climb the firm pay ladder faster, switch firms more frequently and secure higher pay gains conditional on switching. Skill sorting explains most of the widening in early career, but not the initial pay gaps at career start. These results are robust to accounting for compensating differentials and using alternative measures of firm quality.

This paper shows that the local availability of universities acted as a catalyst in the catch-up of women in higher education that has been documented for developed countries in the latter half of the 20th century. It uses the foundation of new universities in the 1960s and 1970s in West German regions which previously did not have a university as a case study to understand how women’s mobility and education decisions interact. I first document women’s low regional mobility in post-war West Germany along with their low educational attainment. Second, I exploit that the university expansion exogenously brought universities to women’s doorsteps in a difference-in-differences (DiD) strategy. Comparing regions which experienced a university opening within 20 km to those where no university was opened, I show that women benefited more than men from a close-by university opening, closing the local gender gap in university education by about 72%. Third, I provide evidence that local universities partly increased university education through reduced costs, while part of the effect is due to higher expected returns, highlighting an important second channel through which universities promote education to local youths.

Pay inequality stems both from firm pay-setting and from workers' individual characteristics. Yet, intergenerational mobility research focuses on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a small share of this firm-based earnings transmission. Instead, high-education and high-occupation workers disproportionately land at high-paying firms. Parental referral networks and the inheritance of industry and labor market context play a supplementary role. As workers with high-education or high-status jobs are increasingly also employed at high paying firms, firm sorting could become increasingly important to intergenerational earnings transmission.

This paper presents Distributional National Accounts (DINA) for Germany from 1992 to 2016. We combine personal income tax files with SOEP survey data to estimate the distribution of national income following the DINA method established by Piketty et al. (2018). We find that economic growth in Germany has been pro-rich from 1992 to 2007 and pro-poor from 2007 to 2016. But despite rising labor incomes for the bottom 50% since 2007, the income gap between the bottom 50% and the top 10% has widened. The polarization is driven by continuously increasing labor income of the lower 9% of the top decile (P90-99). The top 0.1% receives ca. 7% of national income, which is similar to the United States and twice as high as in France.

It has long been known that conventional approaches to finite sample inference for inequality measures based on asymptotic methods or the standard bootstrap do not perform well, even in large samples. See, e.g., Davidson and Flachaire (Journal of Econometrics, 2007) and Cowell and Flachaire (Journal of Econometrics, 2007). The source of the problem is the heavy-tailed nature of income distributions, with a relatively high prevalence of influential high-income outliers in datasets. Can researchers do better? The answer is yes, in principle. Davidson and Flachaire (DF, 2007) and Cowell and Flachaire (CF, 2007) propose inference based on a semi-parametric percentile-t bootstrap in which the upper tail is modelled parametrically by a Pareto distribution, and show using simulated data that accurate inference is achievable with moderately large samples. (For a related approach, see also Alfons et al., JRSS(A) 2011.) In this paper, we provide the first systematic application of the DF-CF inferential approach to real-world income data for multiple years (yearly, 1977-2018), i.e., the same survey data as used by the UK Office for National Statistics for official statistics on inequality. As part of this work, we extend the DF-CF approach to deal with weighted data and a range of inequality indices (Gini, Generalised Entropy family, percentile ratios, and top income shares). We confirm that inequality indices are more precisely estimated using the DF-CF approach rather than the conventional asymptotic approach. But according to our DF-CF estimates, we cannot reject the null hypothesis of no inequality difference between most pairs of years over the period 1977-2018 at conventional levels of statistical significance.

We study individual earnings responses to positive wealth shocks from inheri- tance, inter-vivos gifts, and lotteries. In a life-cycle model we show how responses may differ across the three types of shocks because they occur at different ages. In addition, gifts tend to be targeted, and socio-psychological circumstances differ between the different shocks. We explore these differences in a panel of tax records for a large Swiss canton. We find consistently negative earnings responses, irre- spective of the source of the wealth shock. The strongest responses are found for older workers – partly through early retirement –, and for women. Conditional on age, inheritance triggers weaker earnings responses than lottery winnings. Gifts are associated with the strongest reductions in subsequent earnings. However, strong pre-trends confirm them to be targeted and do not allow us to quantify the causal effect of inter-vivos giving. For instrumented gifts, however, no statistically significant earnings response is observed. This suggests that, when abstracting from targeting, behavioral effects mitigate labor supply reductions of donees.

While nouns in the German language are gendered toward males, the introduction of the "gender star" or "gender colon" have allowed for nouns to be interpreted as not assigning gender, or non-binary. Their usage however has become highly politically polarizing. Using over 40 million online job postings from 2016 to 2023, we document the rising prevalence of the gender star and colon in the German labour market, particularly in German counties with greater support for the Green party. We then study how jobseekers respond when the advertised job title includes such non-binary punctuation. Inclusive job ads receive more clicks and lead to more application starts. The positive effect is larger for the colon and holds when exploiting within firm and job title variation and looking at large companies with rapid increases over time. Finally, using a survey experiment, we investigate how such politically-charged signals in job ads affect sorting and labour market polarization.

Mounting research documents that wealth inequality strongly persists across generations. Inheritances and inter-vivo gifts from parents to children are key contributors to this persistence. Intergenerational transfers are yet not only made unequally between families. It has been shown that a substantial share of intergenerational transfers is also made unequally within families. In this study, we address this puzzle of unequal division and empirically investigate the distribution of intergenerational transfers through the lens of what we call the ‘principle of dynastic succession’. This principle states that intergenerational transfers are made such that the family and its wealth are carried on into the long-lasting future, leading to unequal division. Analyzing administrative data from the German inheritance and gift tax register (2007-2020), we argue that the principle is particularly salient in the presence of structuring assets (e.g. family business) and that its application varies along the estate distribution. Going beyond individual parent-child transactional relationships, the principle of dynastic succession allows to link intra-familial disparities to long-term persistence in overall wealth inequality more broadly. Thereby, it sheds light on a so far neglected mechanism through which the family generates inequalities both within and between generations.

Structural change often accelerates during economic downturns, but the behavioral responses that contribute to this process are not well understood. This paper shows how the selection of students into vocational programs changes in response to economic crisis. The context is the massive economic recession that hit Sweden in 1990, which disproportionally affected the manufacturing and construction sectors. Our analysis shows that students who directly experience the economic shock by experiencing paternal job loss in exposed sectors select into programs less exposed to the crisis. As a result, they achieve better labor market outcomes (higher employment rates and lifetime earnings) than students who chose their occupation before experiencing the crisis. In contrast, students are less responsive to aggregate conditions in their labor market. These results suggest that informational frictions are a key obstacle to structural adjustments on the labor market.

I study changes in selection into parenthood after the introduction of a large universal child benefit in Poland. The patterns of selection have changed significantly and persistently, as positive selection on education has weakened and negative selection on income has strengthened. The gap in birth rates between low-income and high-income couples exceeded 50%, in a stark contrast to zero gaps in the pre-introduction period. In a microsimulation approach, I combine the birth rate changes and existing estimates of the labor supply effects of the transfer to study the impact of these adjustments on poverty reduction associated with the transfer. The negative supply responses reduced the extent of poverty reduction by 27% and fertility adjustments further reduced poverty reduction by 5%.

What are the societal consequences of economic inequality, and how do concerns for these consequences affect individuals' redistributive preferences? This paper examines beliefs about how economic inequality changes society, and establishes a causal link between such inequality externality beliefs and redistributive preferences. Using two representative surveys of a combined 6,731 U.S. citizens, we show that a majority of respondents believe that inequality leads to negative societal outcomes through channels such as increased crime, deteriorating democratic institutions, and diminished economic growth. We establish a causal link from individuals' inequality externality beliefs to their redistributive preferences by using exogenously provided video information treatments. With this and other methods we estimate that inequality externality beliefs are about two-thirds as impactful for individuals' redistributive preferences as broad economic fairness views. Although Democrats are more likely to believe in the negative consequences of inequality than Republicans, beliefs are surprisingly similar across political parties and less polarized than comparable fairness views. Inequality externality-based arguments cause less anger among respondents than fairness-based arguments, however, indicating structural differences in the two types of arguments.

The rise of populist politics has highlighted the increasingly polarized geography of prosperity, and the rise of national income inequalities has been increasingly connected to the evolution of spatial inequalities within countries. Whilst crossnational research on income inequalities has been highly influential, there is limited comparative research into geographic income inequalities that tracks the link over time between national and subnational economic inequality. This paper is a first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, Germany, the United Kingdom and the United States since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are very similar in Canada, France, Germany and the UK. The US is the most spatially unequal; Canada has US levels of national inequality with European spatial inequality; France has very low spatial inequality in top and bottom wages; place is unusually important in the UK; and place makes a low and stable contribution to German inequality. All countries experienced an increase in spatial inequality over the period, though the degree of increase varies considerably. The contribution of inequalities between places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the United Kingdom. Whilst common social, economic and technological shocks are clearly important, the variation in levels and trends of spatial inequality across countries and over time opens the door to comparative research exploring the role of national institutions in mediating how these shocks translate into economic disparities between places.

This study examines how inheritance and gift tax systems may reproduce gender inequalities in parental transfers. Although there is ample research on the role of fiscal policy for wealth inequality between households, we know only little about how taxes shape gender wealth inequality. We focus on financial transfers because a significant share of wealth is not generated from savings but received in transfers. Gender differences in financial transfers might arise or be reproduced if men benefit differently than women from tax exemptions. This could be because men and women receive different types of assets where some are tax-exempted while others are not. To estimate gender gaps in the effective tax rates on parental transfers, we draw on German administrative inheritance and gift tax data. We show that men’s average effective tax rate on inheritance is 2% lower than women’s. For gifts, men’s average effective tax rate is 18% lower than women’s. By discussing and identifying implicit gender discrimination in the inheritance and gift tax system this study adds another factor – tax policy – to the debate about the gender wealth gap.

To assess gender equality in society, it is important to understand how parenthood affects women relative to men. Labor economics has established that women still experience a child penalty in earnings. It is unclear to what degree gender inequality due to childbearing extends beyond the labor market and affects well-being. We combine administrative data from Austria and Denmark with a quasi-experimental event study approach to estimate the impact of the birth of their first child on parents' mental health. We find that mental health deteriorates for both parents after birth, but this effect is much more pronounced for women than for men. The motherhood penalty in mental health is stronger in Austria compared to Denmark. Longer periods of maternal leave exacerbate mental problems.

The baby boomer generation in Britain has accumulated substantial wealth through housing and private pension wealth during the 1990s and 2000s. However, the circumstances for the younger generation in Britain are expected to differ due to considerably less favourable and highly uncertain economic and political environment in the late 2000s and 2010s. Moreover, several studies have pointed to an increasing economic inequality within the younger generation, as their socio-economic outcomes are closely linked to their parents' wealth and social capital. Motivated by this observation, this study questions how Britain's younger adults aged between 25 and 45 accumulate wealth, and whether social origin plays a role in the manner and extent of younger adults' wealth-building. To answer these questions, the study develops a typology of savers and examines whether the initial saver type membership as well as patterns of transitions across the saver types over time differ by parental homeownership.

To establish saver types, it takes a Balance Sheet approach, which distinguishes asset- and debt-holding, and different types of wealth-building vehicles by factors such as risk structure, accessibility and ease of liquidation as well as amounts held in each vehicle, in order to provide nuanced picture of wealth accumulation. Individual balance sheet is built using Wealth and Assets Survey, which is a biennial study on economic circumstances of British households since 2006/8. Factor Mixture Modelling is used to establish saver types, which takes both ownership and amounts held in a certain type of wealth building vehicle into account. Transitions probabilities between 2008/10 and 2014/16 are examined using Latent Transition Analysis. The characteristics associated with a specific saver type at the initial stage and transitions probabilities over time are examined using Latent Transition Analysis in the multi-group analysis framework comparing two groups distinguished by parental homeownership.

Four distinctive saver types are established: undersavers, property saver-dissavers, traditional savers and investor savers in the order of least wealthy to most wealthy group. The dominant wealth portfolio within these saver types shows that their abilities to deal with adverse effect differ substantially. The chances of being allocated to wealthier saver types are closely linked to individuals' socio-economic characteristics as well as parental homeownership. Although transition probabilities are relatively stable given a short observation period, upwards movement is more frequent among those who grew up with home-owning parents, controlling for other variables. This study's findings show how the younger generation's abilities to build wealth may differ at the earlier stage of life. Also, the findings of this study concur with the previous studies that the younger generation's economic outcomes are increasingly connected to their parents', which has substantial policy implications for inequality.