New IZA DPs -- Income / Wealth
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IZA Publications
Jan 28, 2026, 8:20:23 AMJan 28
to it...@umich.edu
Dear Italo Gutierrez,
These new IZA Discussion Papers are now available online.
DP 18287 - Costa-Font/Frank/Raut:
The Effects of Wealth Shocks on Public and Private Long-Term Care Insurance
DP 18303 - Siminski/Wilkins:
Housing, Income Inequality and Progressivity of Taxes and Transfers
DP 18326 - Démurger/Lin/Schmillen/Wang:
Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China
DP 18329 - Mello/Nybom/Stuhler:
A Lifecycle Estimator of Intergenerational Income Mobility
DP 18340 - Pezer/Sologon/Kyzyma/Peluso/O'Donoghue:
Consumption Patterns, Inflation, and Household Welfare: Demand-Based Equivalence Scales in Europe
DP 18352 - Mehrotra:
An Application to Latin America of a Dual Synergies Model: Can a New Industrial Policy Break the Middle Income Trap?
Please find the abstracts and download links below.
IZA DP No. 18287
Joan Costa-Font, Richard Frank, Nilesh Raut:
The Effects of Wealth Shocks on Public and Private Long-Term Care Insurance
(published online in: Journal of Health Economics, 26 November 2025)
Abstract:
The financing of long-term care services and supports (LTSS) relies heavily on self-insurance in the form of housing or financial wealth. Exploiting both local market variation in housing prices and individual-level variation in stock market wealth from 1996 to 2016, we document that exogenous wealth shocks significantly reduce the probability of LTCI coverage, without significantly altering Medicaid eligibility among owners of housing and financial assets. The effect of shocks to liquid wealth strongly dominates the effect of housing wealth changes. A $100K increase in housing (financial) wealth reduces the likelihood of LTCI coverage by 1.24 (3.22) percentage points.
https://docs.iza.org/dp18287.pdf
IZA DP No. 18303
Peter Siminski, Roger Wilkins:
Housing, Income Inequality and Progressivity of Taxes and Transfers
Abstract:
We examine the role of owner-occupied housing for income inequality. Departing from related work, we incorporate accrued capital gains, focus on long-run measures of income, and consider implications for tax progressivity. Using Australia as a case study, we show that housing income can have major implications for the apparent level and trends over time of inequality, progressivity of taxes and transfers, as well as the demographic profile of the rich and the poor. When imputed rent and accrued capital gains—neither of which are taxed—are included in the income base, the redistributive impact of income tax is reduced by 40%.
https://docs.iza.org/dp18303.pdf
IZA DP No. 18326
Sylvie Démurger, Carl Lin, Achim Schmillen, Dewen Wang:
Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China
(published in: World Development, Volume 198, February 2026, 107227)
Abstract:
Minimum wages are found to have an inconclusive impact on poverty. Using China’s individual-level panel dataset combined with county-level minimum wages, our paper shows that minimum wages have a moderate yet sustained effect on poverty reduction. The results show a two-sided effect: higher minimum wages help pull some workers out of poverty, while simultaneously pushing others in. This dynamic of larger “pulling” effects being counterbalanced by smaller “pushing” effects explains why existing studies often find that minimum wages have a negligible or minimal impact on poverty reduction. Notably, the poverty reduction effect is most pronounced for female workers.
https://docs.iza.org/dp18326.pdf
IZA DP No. 18329
Ursula Mello, Martin Nybom, Jan Stuhler:
A Lifecycle Estimator of Intergenerational Income Mobility
Abstract:
Lacking lifetime income data, most intergenerational mobility estimates are subject to lifecycle bias. Using long income series from Sweden and the US, we illustrate that standard correction methods struggle to account for one important property of income processes: children from affluent families experience faster income growth, even conditional on their own characteristics. We propose a lifecycle estimator that captures this pattern and performs well across different settings. We apply the estimator to study mobility trends, including for recent cohorts that could not be considered in prior work. Despite rising income inequality, intergenerational mobility remained largely stable in both countries.
https://docs.iza.org/dp18329.pdf
IZA DP No. 18340
Martina Pezer, Denisa M. Sologon, Iryna Kyzyma, Eugenio Peluso, Cathal O'Donoghue:
Consumption Patterns, Inflation, and Household Welfare: Demand-Based Equivalence Scales in Europe
Abstract:
Equivalence scales are central to distributional analysis, adjusting household incomes for size and composition and shaping poverty and inequality measurement. Despite changes in consumption patterns, most applied work continues to rely on the modified OECD scale from the 1990s. We revisit equivalence scales for 23 EU countries using a linear expenditure demand system and harmonized Household Budget Survey data for 2010–2020. We estimate three demand-based scales: a minimum-needs scale anchored in subsistence, a utility-implicit scale based on welfare equivalence under common preferences, and a utility-explicit scale for sensitivity analysis. Our estimates imply larger economies of scale than the modified OECD scale, particularly for larger households. Scales decline with living standards and over time. Simulations of 2020–2024 price changes suggest that recent inflation is likely to further reduce equivalence scales, with stronger effects for households with children. While regional heterogeneity remains, poverty measures are more sensitive than inequality measures to the choice of scale. The results highlight the need to update equivalence scales and to report distributional statistics under alternative assumptions.
https://docs.iza.org/dp18340.pdf
IZA DP No. 18352
Santosh Mehrotra:
An Application to Latin America of a Dual Synergies Model: Can a New Industrial Policy Break the Middle Income Trap?
Abstract:
The paper applies the “dual synergies” model—linking economic growth, poverty reduction, and human capability formation—to explain why Latin America (LAC) remains trapped at middle-income levels. It challenges orthodox views that prioritize growth alone, arguing instead that growth, social policy, and human capital mutually reinforce each other. Using stylized facts, the paper shows that LAC’s extractive, commodity-dependent development model has produced volatile growth, weak job creation, high informality, and limited poverty reduction. This contrasts sharply with East Asia, where coordinated industrial policy, early investments in health and education, and financial deepening enabled sustained growth and structural transformation. In LAC, weak fiscal capacity, low savings, foreign-dominated banking, and inequality constrain public investment in human capital, weakening growth–poverty links. The paper argues that breaking the middle-income trap requires an integrated strate gy: a renewed, state-capable industrial policy aimed at diversification, innovation, and manufacturing upgrading, combined with stronger social policies.
https://docs.iza.org/dp18352.pdf
Please click here to change your subscription status.
If you have trouble downloading the papers, or for any other questions regarding the IZA Discussion Paper Series, contact public...@iza.org.
These new IZA Discussion Papers are now available online.
DP 18287 - Costa-Font/Frank/Raut:
The Effects of Wealth Shocks on Public and Private Long-Term Care Insurance
DP 18303 - Siminski/Wilkins:
Housing, Income Inequality and Progressivity of Taxes and Transfers
DP 18326 - Démurger/Lin/Schmillen/Wang:
Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China
DP 18329 - Mello/Nybom/Stuhler:
A Lifecycle Estimator of Intergenerational Income Mobility
DP 18340 - Pezer/Sologon/Kyzyma/Peluso/O'Donoghue:
Consumption Patterns, Inflation, and Household Welfare: Demand-Based Equivalence Scales in Europe
DP 18352 - Mehrotra:
An Application to Latin America of a Dual Synergies Model: Can a New Industrial Policy Break the Middle Income Trap?
Please find the abstracts and download links below.
IZA DP No. 18287
Joan Costa-Font, Richard Frank, Nilesh Raut:
The Effects of Wealth Shocks on Public and Private Long-Term Care Insurance
(published online in: Journal of Health Economics, 26 November 2025)
Abstract:
The financing of long-term care services and supports (LTSS) relies heavily on self-insurance in the form of housing or financial wealth. Exploiting both local market variation in housing prices and individual-level variation in stock market wealth from 1996 to 2016, we document that exogenous wealth shocks significantly reduce the probability of LTCI coverage, without significantly altering Medicaid eligibility among owners of housing and financial assets. The effect of shocks to liquid wealth strongly dominates the effect of housing wealth changes. A $100K increase in housing (financial) wealth reduces the likelihood of LTCI coverage by 1.24 (3.22) percentage points.
https://docs.iza.org/dp18287.pdf
IZA DP No. 18303
Peter Siminski, Roger Wilkins:
Housing, Income Inequality and Progressivity of Taxes and Transfers
Abstract:
We examine the role of owner-occupied housing for income inequality. Departing from related work, we incorporate accrued capital gains, focus on long-run measures of income, and consider implications for tax progressivity. Using Australia as a case study, we show that housing income can have major implications for the apparent level and trends over time of inequality, progressivity of taxes and transfers, as well as the demographic profile of the rich and the poor. When imputed rent and accrued capital gains—neither of which are taxed—are included in the income base, the redistributive impact of income tax is reduced by 40%.
https://docs.iza.org/dp18303.pdf
IZA DP No. 18326
Sylvie Démurger, Carl Lin, Achim Schmillen, Dewen Wang:
Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China
(published in: World Development, Volume 198, February 2026, 107227)
Abstract:
Minimum wages are found to have an inconclusive impact on poverty. Using China’s individual-level panel dataset combined with county-level minimum wages, our paper shows that minimum wages have a moderate yet sustained effect on poverty reduction. The results show a two-sided effect: higher minimum wages help pull some workers out of poverty, while simultaneously pushing others in. This dynamic of larger “pulling” effects being counterbalanced by smaller “pushing” effects explains why existing studies often find that minimum wages have a negligible or minimal impact on poverty reduction. Notably, the poverty reduction effect is most pronounced for female workers.
https://docs.iza.org/dp18326.pdf
IZA DP No. 18329
Ursula Mello, Martin Nybom, Jan Stuhler:
A Lifecycle Estimator of Intergenerational Income Mobility
Abstract:
Lacking lifetime income data, most intergenerational mobility estimates are subject to lifecycle bias. Using long income series from Sweden and the US, we illustrate that standard correction methods struggle to account for one important property of income processes: children from affluent families experience faster income growth, even conditional on their own characteristics. We propose a lifecycle estimator that captures this pattern and performs well across different settings. We apply the estimator to study mobility trends, including for recent cohorts that could not be considered in prior work. Despite rising income inequality, intergenerational mobility remained largely stable in both countries.
https://docs.iza.org/dp18329.pdf
IZA DP No. 18340
Martina Pezer, Denisa M. Sologon, Iryna Kyzyma, Eugenio Peluso, Cathal O'Donoghue:
Consumption Patterns, Inflation, and Household Welfare: Demand-Based Equivalence Scales in Europe
Abstract:
Equivalence scales are central to distributional analysis, adjusting household incomes for size and composition and shaping poverty and inequality measurement. Despite changes in consumption patterns, most applied work continues to rely on the modified OECD scale from the 1990s. We revisit equivalence scales for 23 EU countries using a linear expenditure demand system and harmonized Household Budget Survey data for 2010–2020. We estimate three demand-based scales: a minimum-needs scale anchored in subsistence, a utility-implicit scale based on welfare equivalence under common preferences, and a utility-explicit scale for sensitivity analysis. Our estimates imply larger economies of scale than the modified OECD scale, particularly for larger households. Scales decline with living standards and over time. Simulations of 2020–2024 price changes suggest that recent inflation is likely to further reduce equivalence scales, with stronger effects for households with children. While regional heterogeneity remains, poverty measures are more sensitive than inequality measures to the choice of scale. The results highlight the need to update equivalence scales and to report distributional statistics under alternative assumptions.
https://docs.iza.org/dp18340.pdf
IZA DP No. 18352
Santosh Mehrotra:
An Application to Latin America of a Dual Synergies Model: Can a New Industrial Policy Break the Middle Income Trap?
Abstract:
The paper applies the “dual synergies” model—linking economic growth, poverty reduction, and human capability formation—to explain why Latin America (LAC) remains trapped at middle-income levels. It challenges orthodox views that prioritize growth alone, arguing instead that growth, social policy, and human capital mutually reinforce each other. Using stylized facts, the paper shows that LAC’s extractive, commodity-dependent development model has produced volatile growth, weak job creation, high informality, and limited poverty reduction. This contrasts sharply with East Asia, where coordinated industrial policy, early investments in health and education, and financial deepening enabled sustained growth and structural transformation. In LAC, weak fiscal capacity, low savings, foreign-dominated banking, and inequality constrain public investment in human capital, weakening growth–poverty links. The paper argues that breaking the middle-income trap requires an integrated strate gy: a renewed, state-capable industrial policy aimed at diversification, innovation, and manufacturing upgrading, combined with stronger social policies.
https://docs.iza.org/dp18352.pdf
Please click here to change your subscription status.
If you have trouble downloading the papers, or for any other questions regarding the IZA Discussion Paper Series, contact public...@iza.org.
IZA Publications
Jan 28, 2026, 8:22:25 AMJan 28
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