Inequality over the Life Cycle, Housing and the Business Cycle

A talk by Christian Scharrer, University of Augsburg, in the Economics Speaker Series

Friday, March 8
4 pm
Arts Building Room 807, 9 Campus Dr.

Info: economics.dept@usask.ca

Abstract
We study the redistributive impact of a productivity shock in both the consumption goods and housing sectors in a lifecycle model that distinguishes between homeowners and renters. Our model is able to replicate the heterogeneity of income and wealth and the qualitative lifecycle behaviour of housing and consumption. The model clarifies how the interaction between the business cycle and housing affects inequality. In accordance with the experience of the Great Recession, we find that income inequality increases when house prices fall. Young homeowners with high debt are particularly vulnerable to an economic downturn.

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