The Nature of Household Labor Income Risk

Pruitt, Seth; Turner, Nick

doi:10.2139/ssrn.3107794

Cited by 2 publications

(3 citation statements)

References 19 publications

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“…As can be seen from the figures, changes in household earnings are substantially less negatively skewed than male earnings changes. This finding is in line with what Pruitt and Turner (2018) found for the U.S.…”

Section: Cross-sectional Moments Of Household Labor and Disposable In...supporting

confidence: 93%

“…Some recent papers consider higher-order moments of household labor income risk and household disposable income risk but focus mainly on the variation over the business cycle. Pruitt and Turner (2018) use Internal Revenue Service (IRS) data to study the distribution of household labor income risk over the business cycle. In line with our findings for Norway, they find that household labor income growth in the U.S. is significantly less negatively skewed than individual earnings growth.…”

Section: Related Literaturementioning

confidence: 99%

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Dissecting Idiosyncratic Earnings Risk

Halvorsen¹,

Holter²,

Ozkan³

et al. 2022

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This paper examines whether nonlinear and non-Gaussian features of earnings dynamics are caused by hours or hourly wages. Our findings from the Norwegian administrative and survey data are as follows: (i) Nonlinear mean reversion in earnings is driven by the dynamics of hours worked rather than wages since wage dynamics are close to linear, while hours dynamics are nonlinear-negative changes to hours are transitory, while positive changes are persistent. (ii) Large earnings changes are driven equally by hours and wages, whereas small changes are associated mainly with wage shocks. (iii) Both wages and hours contribute to negative skewness and high kurtosis for earnings changes, although hour-wage interactions are quantitatively more important. (iv) When considering household earnings and disposable household income, the deviations from normality are mitigated relative to individual labor earnings: changes in disposable household income are approximately symmetric and less leptokurtic.

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Section: Cross-sectional Moments Of Household Labor and Disposable In...supporting

confidence: 93%

Section: Related Literaturementioning

confidence: 99%

Dissecting Idiosyncratic Earnings Risk

Halvorsen¹,

Holter²,

Ozkan³

et al. 2022

View full text Add to dashboard Cite

show abstract

“…Pruitt and Turner (2019) measure the spousal earnings response to earnings fluctuations of the household head both in recessions and in expansions using SSA data but do not focus on measuring the response to job displacement shocks specifically. Job displacement events are particularly relevant because their effects are large and long-lasting compared with temporary earnings fluctuations.…”

mentioning

confidence: 99%

Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers

Birinci

2019

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I document a small spousal earnings response to the job displacement of the family head. The response is even smaller in recessions, when earnings losses are larger and additional insurance is most valuable. I investigate whether the small response is an outcome of the crowding-out effects of government transfers. To accomplish this, I use an incomplete markets model with family labor supply and aggregate fluctuations where predicted spousal labor supply elasticities with respect to transfers are in line with microeconomic estimates both in aggregate and across subpopulations. Counterfactual experiments indeed reveal that generous transfers in recessions discourage the spousal labor supply significantly. I then show that the optimal policy features procyclical means-tested and countercyclical employment-tested transfers, unlike the existing policy that maintains generous transfers of both types in recessions. Abstracting from the incentive costs of transfers on the spousal labor supply changes both the level and cyclicality of optimal transfers.

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The Nature of Household Labor Income Risk

Cited by 2 publications

References 19 publications

Dissecting Idiosyncratic Earnings Risk

Dissecting Idiosyncratic Earnings Risk

Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers

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