Heterogeneity and Aggregation
- 1 May 2005
- journal article
- Published by American Economic Association in Journal of Economic Literature
- Vol. 43 (2) , 347-391
- https://doi.org/10.1257/0022051054661486
Abstract
This survey covers recent solutions to aggregation problems in three application areas, consumer demand analysis, consumption growth and wealth, and labor participation and wages. Each area involves treatment of heterogeneity and nonlinearity at the individual level. Three types of heterogeneity are highlighted: heterogeneity in individual tastes, heterogeneity in income and wealth risks and heterogeneity in market participation. Work in each area is illustrated using results from empirical data. The overall aim is to show how concerns faced by empirical researchers regarding aggregation can be addressed.Keywords
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