Earnings Risk in the Household: Evidence from Millions of U.S. Tax Returns

70 Pages Posted: 30 Jan 2018 Last revised: 7 Mar 2019

See all articles by Seth Pruitt

Seth Pruitt

Arizona State University (ASU) - Finance Department

Nick Turner

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: March 5, 2019

Abstract

Do households with multiple working-age adults ameliorate the primary earner's labor market risk? We answer the question using detailed administrative data from the IRS. Households face substantially less skewness risk than male earnings alone, and face roughly half the countercyclical increase in risk. Since the household is the key decision-maker in many economic models, it is important to demonstrate the extent to which primary labor earnings risk translates into risk at the household level.

Keywords: earnings risk, idiosyncratic earnings shocks, household

JEL Classification: E32, E24, E44, J21, J31

Suggested Citation

Pruitt, Seth and Turner, Nick, Earnings Risk in the Household: Evidence from Millions of U.S. Tax Returns (March 5, 2019). Available at SSRN: https://ssrn.com/abstract=3107794 or http://dx.doi.org/10.2139/ssrn.3107794

Seth Pruitt (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Nick Turner

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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