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Age-income dynamics over the life course: Cohort transition patterns in relative income based on Canadian tax returns

TitleAge-income dynamics over the life course: Cohort transition patterns in relative income based on Canadian tax returns
Year of Publication2019
AuthorsDenton, F. T., Spencer B. G., and Yip T. A.
JournalMcMaster Department of Economics Working Paper
Abstract

This paper is concerned with patterns of cohort aging and income progression. We take a new approach to the characterization of relative income, explore the dynamics of age/income progression through the use of state transition matrices, consider alternative cohort definitions, and introduce an artificial cross-section cohort based on the transition matrices. Our applications make use of individual income records from the Statistics Canada Longitudinal Administrative Database. Relative income is defined by how an individual of a given age is positioned in the overall distribution of income in a given year. We derive the proportionate distribution of individuals in each decile group at each representative age, starting at 24, and the transition matrices then show the movements from the distribution at one age to the distribution five years later.

URLhttps://ideas.repec.org/p/mcm/deptwp/2019-02.html
Document URLhttps://socialsciences.mcmaster.ca/econ/rsrch/papers/archive/2019-02.pdf