On the Estimation of Lifetime Income

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Abstract
Lifetime income, say Vs, may be defined as Vs = ΣT t=sctyt where yt is income (earnings) at age t, ct is some discount rate and s is the age an individual enters the labor force. Obviously, yt i.e., the income path over the individual's span of active life, plays a crucial part in the calculation of Vs. Mostly graphical methods have been employed for estimating the income age profile. This article presents a statistical framework for estimating lifetime income. Moreover, the first and second moments of the distribution of lifetime income are derived, and these results are applied to Dutch income data.

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