Schooling, Ability, Non Pecuniary Rewards, Socioeconomic Background and the Lifetime Distribution of Earnings

Inequality in income or earnings is the most indisputable fact about the distribution of income. Inequality in income distribution occurs in most political and economic models and has from ancient times to the modern era. Society and government have expressed a desire to establish a minimum floor for members of society -- though the level of the floor and the means of achieving it are matters of debate. Besides a direct interest in the questions of the sources of inequality, how to achieve income redistribution, and the efficacy of various policy tools, economists are also concerned with establishing how various labor markets operate, how rational individuals are, and how important are individual effort , chance, and predestination. Economists have constructed various theories that purport to explain income distribution. Some aspects of these theories have been tested against empirical observations. This study will extend the range of such tests. In addition, we will generate some new facts that a complete theory should be able to explain.