The Nature of Household Labor Income Risk

70 Pages Posted: 30 Jan 2018 Last revised: 18 Apr 2018

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: February 6, 2018

Abstract

What is the nature of labor income risk facing households? We answer this question using detailed administrative data on household earnings from the U.S. Internal Revenue Service. By analyzing total household labor earnings as well as each member's earnings, we offer several new findings. One, households face substantially less risk than males in isolation. Second, households face roughly half the countercyclical increase in risk that males face. Third, spousal labor income ameliorates household earnings risk through both extensive and intensive margins.

Keywords: earnings risk, idiosyncratic earnings shocks, cost of business cycles, household, extensive margin, intensive margin

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

Suggested Citation

Pruitt, Seth and Turner, Nick, The Nature of Household Labor Income Risk (February 6, 2018). 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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