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Econ890: Topics in Income and Wealth

Spring 2021. Prof. Lutz Hendricks. UNC


Preliminary Plans

Econ890 is a graduate course aimed at students in their second year or higher. It is part of the macro field but may be of interest to students specializing in public policy or even applied micro.

This course is currently at the planning stage. If you are interested in taking it, please contact me. Input as to what material would be of interest is welcome.

My current plan is to focus the course on inequality in wealth and income, mostly within countries.

The objectives would be:

  1. Learn about state of the art research in the area of inequality and perhaps cross-country income differences.
  2. Develop ideas for research projects in the area.

The organization would be similar to a reading group. I envision a few lectures to provide background material and review classic papers from the literature. But mainly student presentations that would be structured like discussions at a conference. The assumption would be that everyone has read the papers discussed in each class meeting (probably 4 papers a week). The presenters would offer insights into what makes each paper tick, what is compelling and what is not. Much of the time would be spent on simply discussing each paper.

Over time, students would come up with project ideas. Once a promising idea is identified, each student develops it as far as possible. This would at least entail placing the idea into the context of the literature, identifying the contribution, and outlining a model. The end product would be a fully written up research proposal.

In the past, this course covered computational methods as well. I have come to the conclusion that mixing these with the economic material is not productive. The department needs a dedicated course on computing structural models, but Econ890 is not that.

Preliminary Outline

The outline consists of lectures (presented by me) and discussions (student presentations with class discussion).

Basic Facts

Lecture: Basic facts about income and wealth distribution

  • U.S. inequality over time: rising top incomes and wealth shares, skill premium.
  • Brief overview of data sources and limitations.

Earnings Distribution

Lecture: Facts and Classic Papers

  • Rising skill premium (Katz/Murphy).
  • SBTC and the race between education and technology.
  • Models with exogenous earnings processes. RIP and HIP.
  • Administrative earnings data.

Discussion:

  • Models with endogenous earnings distribution.
  • Cross-country differences.
  • Labor market polarization.
  • International trade.

Rising Top Incomes

Lecture: Facts and stories.

Discussion:

  • Taxing top earners: Superstar models, innovation.

Wealth Inequality

Lecture: Facts and classic models.

Discussion:

  • Rising wealth inequality over time.
  • Entrepreneurship
  • Inheritances and estate taxation
  • Taxing top earners with entrepreneurship