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Article summary:
1. This article examines the extent to which Pareto efficient allocations in models without frictions can produce the life-cycle inequality patterns seen in micro data from the U.S. Consumer Expenditure Survey (CEX).
2. The paper finds that a simple model without frictions can produce the rough magnitudes of the average slopes of all the profiles displayed in Fig. 1, when preference and wage parameters are within ranges estimated in a large applied literature.
3. The same class of models is able to produce both the levels and the slopes of the profiles in Fig. 1 when measurement errors are taken into consideration.
Article analysis:
This article provides an interesting analysis of how Pareto efficient allocations in models without frictions can produce life-cycle inequality patterns seen in micro data from the U.S. Consumer Expenditure Survey (CEX). The paper finds that a simple model without frictions can produce the rough magnitudes of the average slopes of all the profiles displayed in Fig. 1, when preference and wage parameters are within ranges estimated in a large applied literature, and also produces both levels and slopes when measurement errors are taken into consideration.
The article is generally reliable, as it draws on existing research to support its claims and provides evidence for its conclusions through empirical analysis and modelling techniques. However, there are some potential biases that should be noted; for example, it does not explore counterarguments or present both sides equally, nor does it consider possible risks associated with its findings or implications for policymaking decisions based on them. Additionally, while it acknowledges other literatures related to its topic, it does not provide any detailed discussion or comparison between them and its own findings; this could have been useful for providing further context to its conclusions.