@techreport{HaanKemptnerProwseetal., type = {Working Paper}, author = {Haan, Peter and Kemptner, Daniel and Prowse, Victoria and Schaller, Maximilian}, title = {Insurance, Redistribution, and the Inequality of Lifetime Income}, series = {Berlin School of Economics Discussion Papers}, journal = {Berlin School of Economics Discussion Papers}, edition = {No. 28}, doi = {10.48462/opus4-5112}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-51126}, pages = {70}, abstract = {Individuals vary considerably in how much they earn during their lifetimes. This study examines the role of the tax-and-transfer system in mitigating such inequalities, which could otherwise lead to disparities in living standards. Utilizing a life-cycle model, we determine that taxes and transfers offset 45\% of lifetime earnings inequality attributed to differences in productive abilities and education. Additionally, the system insures against 48\% of lifetime earnings risk. Implementing a lifetime tax reform linking annual taxes to previous employment could improve the system's insurance capabilities, albeit at the cost of a lower employment rate.}, language = {en} }