Vesa-Matti Heikkuri

vesa-matti.heikkuri at

Tampere University


I am a postdoctoral research fellow at the Finnish Centre of Excellence in Tax Systems Research at Tampere University. My research focuses on economic inequality, demographic economics, and macroeconomics.

Working papers

Job market paper 1: Population Aging, Cohort Replacement, and the Evolution of Income Inequality in the United States (with Matthias Schief) Latest version

This paper examines the impact of demographic change on household income inequality in the United States, both historically and prospectively. We emphasize the distinct roles of population aging and cohort replacement and develop a methodology to study their joint compositional effect on income inequality. In the process, we also develop a novel methodology to aggregate subgroup Gini coefficients into a population-level Gini coefficient based on the principle of maximum entropy. We document that cohorts born later in the 20th century embody higher levels of income inequality compared to earlier-born cohorts, and we argue that most of the increase in inequality over the past two decades can be accounted for by demographic change. Moreover, we predict that demographic change over the next two decades will lead to further increase of the Gini coefficient by one to six percentage points.

Job market paper 2: Subgroup Decomposition of the Gini Coefficient: A New Solution to an Old Problem (with Matthias Schief) Latest version

We study inequality decomposition by population subgroups. We define properties of a satisfactory decomposition and ask what these properties imply for the decomposition of familiar inequality indices. We find that the Gini coefficient, the generalized entropy indices, and the Foster-Shneyerov indices all admit satisfactory decomposition formulas derived from a common set of axioms. While our axiomatic approach recovers the known decomposition formulas for the generalized entropy and the Foster-Shneyerov indices, it leads us to a novel decomposition formula for the Gini coefficient. The decomposition of the Gini coefficient is easy to compute, and it has both a geometric and an arithmetic intuition.

Work in progress

On the Determinacy of Equilibrium in a Continuous-time Overlapping Generations Model

Institutional Changes and the Allocation of Talent: Macroeconomic Effects of a School Reform in Finland (with Cosimo Petracchi and Matthias Schief)

Tight Bounds for the Gini Coefficient of Composite Populations (with Matthias Schief)

Optimal Transport and the Measurement of Inequality (with Matthias Schief)
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