University of Minnesota
We discussed some data on wage inequality and income inequality. We looked at wage inequality trends from Autor, Katz and Kearney. We discussed how to decompose wage inequality in a component explained by a given factor (i.e. education) and residual. We looked at some trends in the top income shares analyzed by Piketty and Saez
Decomposing the increase in income inequality in permanent v/s transitory. Three methods: purely statistical, using observables, from consumption data. Katz and Autor HLE (2.4, 2.5 and 2.6). Inequality over the life cycle Deaton and Paxson, Attanasio and Davis, Heathcote, Storesletten and Violante
Aiyagari Hugget model of consumption-saving
How to compute the Aiyagari-Hugget model.
Solving for decision rules: Policy function iteration, value function derivative iteration, policy function iteration and endogenous grid (see Barillas and Villaverde)
Solving for stationary equilibria
Endogenizing the income process: Adding leisure. Read Heathcote, Storesletten and Violante: Insurance and Opportunities: The Welfare Implications of Rising Wage Dispersion
Adding human capital accumulation. Hugget, Yaron and Ventura: Sources of Life-Cycle Inequality
Oct 26. First class will meet in Heller 969 at 9.15
Nov 7. New Classroom Heller 969, same meeting time. There will be only one class in which we will go back to 1275.
Nov. 28. No Class on Nov 30
Dec. 6. Next class, December 7 we'll meet in room 1275. All remaining classes, including the extra class, will be in 969. We will have an extra class on Monday December 11, from 5.15-7.00 pm.
Jan 10. Problem set 3 is now on line. The final requirement for the class is either problem set 3, or the research project described in the syllabus (extra points if you do both!). The deadline for handing those in is January 29. I will submit grades shortly after.