The Nature of Household Labor Income Risk
70 Pages Posted: 30 Jan 2018 Last revised: 18 Apr 2018
Date Written: February 6, 2018
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
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