This article reviews macroeconomic models with heterogeneous households. A key
question for the relevance of these models concerns the degree to which markets are …

We study individual male earnings dynamics over the life cycle using panel data on millions
of US workers. Using nonparametric methods, we first show that the distribution of earnings …

What shapes the optimal degree of progressivity of the tax and transfer system? On the one
hand, a progressive tax system can counteract inequality in initial conditions and substitute …

This paper documents how life cycle wage growth varies across countries. We harmonize
repeated cross-sectional surveys from a set of countries of all income levels and then …

Many households hold little wealth. In standard precautionary savings models these
households should not only display higher marginal propensities to consume (MPCs), but …

We use micro data from the US Internal Revenue Service to document how Federal Income
tax liabilities vary with income, marital status and the number of dependents. We report facts …

Fiscal multipliers appear to vary greatly over time and space. Based on VARs for a large
number of countries, we document a strong correlation between wealth inequality and the …

The structure of taxes and their burden have undergone large and frequent changes over
time. We provide a brief history of US federal income tax reform since the 1960s, calculate …

We address the question in the title in a heterogeneous-agent incomplete-market model
featuring exogenous idiosyncratic risk, endogenous skill investment, and flexible labor …

How much additional tax revenue can the government generate by increasing the level of
labor income taxes? In this paper, we argue that the degree of tax progressivity is a …