Human Capital and Earnings Distribution Dynamics

Mean earnings and measures of earnings dispersion and skewness all increase in US data over most of the working life-cycle for a typical cohort as the cohort ages. We show that a benchmark human capital model can replicate these properties from the right distribution of initial human capital and learning ability. These distributions have the property that learning ability must differ across agents and that learning ability and initial human capital are positively correlated.

Delineation of valleys and valley floors

Methods to automatically derive landforms have typically focused on pixel-based, bottom-up approaches and most commonly on the derivation of topographic eminences. In this paper we describe an object-based, top-down algorithm to identify valley floors. The algorithm is based on a region growing approach, seeded by thalwegs with pixels added to the region according to a threshold gradient value. Since such landforms are fiat we compare the results of our algorithm for a particular valley with a number of textual sources describing that valley. In a further comparison, we computed a pixel-based six-fold morphometric classification for regions we classified as either being, or not being, valley floor. The regions classified as valley floor are dominated by pla nar slopes and channels, though the algorithm is robust enough to allow local convexities to be classified as within the valley floor. Future work will explore the delineation of valley sides, and thus complete valleys

Optimal Taxation With Endogenous Insurance Markets

We study optimal taxation in an economy where the skills of agents evolve stochastically over time and are private information and in which agents can trade unobservably in competitive markets. We show that competitive equilibria are constrained inefficient. The government can improve welfare by distorting capital accumulation with the sign of the distortion depending on the nature of the skill process. Finally, we show that private insurance provision responds endogenously to policy, that government insurance tends to crowd out private insurance, and, in a calibrated example, that this crowding out effect is large. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.