Chapter

Spaghetti Unravelled: A Model-Based Description of Differences in Income-Age Trajectories

Stephen P. Jenkins

in Changing Fortunes

Published in print July 2011 | ISBN: 9780199226436
Published online September 2011 | e-ISBN: 9780191728457 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199226436.003.0007
Spaghetti Unravelled: A Model-Based Description of Differences in Income-Age Trajectories

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This chapter describes individuals' income-age trajectories. A picture of these looks like a plateful of cooked spaghetti but it is shown that this spaghetti can be unravelled using a statistical model. Differences in lifecycle income profiles reflect differences in income at the start of the working life and in income growth rates, and the association between initial incomes and income growth rates. There is also a role played by individual-specific income changes from one year to the next, representing transitory variation, measurement error, or events such as having children, or family formation or dissolution. The analysis is undertaken initially in terms of income measured in terms of wages but results are also presented for the needs-adjusted household income measure that is used throughout the rest of the book.

Keywords: income-age trajectory; lifecycle income profile; individual income growth; household income

Chapter.  12172 words.  Illustrated.

Subjects: Financial Markets

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