Brinca, PedroFerreira, Ana Melissa Almeida2019-04-162019-04-162019-01-16http://hdl.handle.net/10362/66766Since the 1980’s, income inequality has increased markedly and is at the highest level ever since it has been recorded in the U.S. This paper uses an overlapping-generations model with incomplete markets that allows for household heterogeneity and that is calibrated to match the U.S. economy with the purpose to study how skill-biased technological change (SBTC) and changes in taxation quantitatively account for the increase in inequality from 1980 to 2010. We find that SBTC and taxation decrease account for 48% of the total increase in the income Gini coefficient. In particular, we conclude that SBTC alone accounted for 42% of the overall increase in income inequality, while changes in the progressivity of the income tax schedule alone accounted for 5,7%.engTechnical changeIncome inequalityWealth inequalityHeterogeneityTaxation JEL Codes E21J10master thesis202208885