Income changes and their determinants over the lifecycle

Document type
Working Paper
Author(s)
Hood, Andrew; Joyce, Robert
Publisher
Institute for Fiscal Studies
Date of publication
21 December 2015
Series
IFS Working Paper; W15/33
Subject(s)
Social Policy, Poverty Alleviation Welfare Benefits and Financial Inclusion
Collection
Social welfare
Material type
Reports

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The evolution of individuals’ incomes across the course of their lives, and the extent to which that evolution is predictable from the perspective of the individual, are central questions in microeconomics.

There are implications for the measurement of economic welfare, the modelling of consumption and savings behaviour, and assessments of whether individuals are prepared for retirement.

Following a sample of UK households over nearly twenty years using the British Household Panel Survey (BHPS), this report investigates the distribution of changes in earnings and incomes over two different periods of the lifecycle: prime working-age life (35-44 to 50-59), and the move into retirement (50-59 to 66-75).

The key finding is that changes in family structure and the characteristics of partners are more important than changes in an individual’s employment status. It also explains variable incomes between mid and late working-age life.

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