Consumption Inequality and Family Labor Supply Blundell, Richard; Pistaferri, Luigi; Saporta-Eksten, Itay
The American economic review,
02/2016, Letnik:
106, Številka:
2
Journal Article
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We examine the link between wage and consumption inequality using a life-cycle model incorporating consumption and family labor supply decisions. We derive analytical expressions for the dynamics of ...consumption, hours, and earnings of two earners in the presence of correlated wage shocks, nonseparability, progressive taxation, and asset accumulation. The model is estimated using panel data for hours, earnings, assets, and consumption. We focus on family labor supply as an insurance mechanism and find strong evidence of smoothing of permanent wage shocks. Once family labor supply, assets, and taxes are properly accounted for there is little evidence of additional insurance.
Consumption Inequality Attanasio, Orazio P.; Pistaferri, Luigi
The Journal of economic perspectives,
04/2016, Letnik:
30, Številka:
2
Journal Article
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In this essay, we discuss the importance of consumption inequality in the debate concerning the measurement of disparities in economic well-being. We summarize the advantages and disadvantages of ...using consumption as opposed to income for measuring trends in economic well-being. We critically evaluate the available evidence on these trends, and in particular discuss how the literature has evolved in its assessment of whether consumption inequality has grown as much as or less than income inequality. We provide some novel evidence on three relatively unexplored themes: inequality in different spending components, inequality in leisure time, and intergenerational consumption mobility.
We decompose the wealth effect on consumption into two components. First, we distinguish between exogenous and endogenous wealth changes. Second, we distinguish between anticipated and unanticipated ...exogenous changes. We estimate the impact of exogenous components using data from the 2008–2010 panel of the Italian Survey of Household Income and Wealth. The wealth effect is about 3 cents per (unexpected) euro increase in wealth and driven by house price changes. The consumption response to anticipated changes in wealth is of similar magnitude and also driven by housing. We show that these findings are consistent with binding borrowing constraints.
This paper examines the link between income and consumption inequality. We create panel data on consumption for the Panel Study of Income Dynamics using an imputation procedure based on food demand ...estimates from the Consumer Expenditure Survey. We document a disjuncture between income and consumption inequality over the 1980s and show that it can be explained by changes in the persistence of income shocks. We find some partial insurance of permanent shocks, especially for the college educated and those near retirement. We find full insurance of transitory shocks except among poor households. Taxes, transfers, and family labor supply play an important role in insuring permanent shocks.
We specify a life-cycle model of consumption, labor supply and job mobility in an economy with search frictions. We distinguish different sources of risk, including shocks to productivity, job ...arrival, and job destruction. Allowing for job mobility has a large effect on the estimate of productivity risk. Increases in the latter impose a considerable welfare loss. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of programs such as Food Stamps, partially insuring productivity risk, is greater than the value of unemployment insurance which provides (partial) insurance against employment risk.
We review different empirical approaches that researchers have taken to estimate how consumption responds to income changes. We critically evaluate the empirical evidence on the sensitivity of ...consumption to predicted income changes, distinguishing between the traditional excess sensitivity tests and the effect of predicted income increases and income declines. We also review studies that attempt to estimate the marginal propensity to consume out of income shocks, distinguishing between three different approaches: identifying episodes in which income changes unexpectedly, relying on the covariance restrictions that the theory imposes on the joint behavior of consumption and income growth, and combining realizations and expectations of income or consumption in surveys in which data on subjective expectations are available.
We study choices of households deciding on consumption and allocation of spouses’ time to work, leisure, and child care. With uncertainty, the allocation of goods and time over the life cycle also ...serves the purpose of smoothing marginal utility in response to shocks. Combining data on consumption, wages, hours of work, and time spent with children, we compute the sensitivity of consumption and time allocation to transitory and permanent wage shocks. We find that family labor supply responses depend on three counteracting forces: complementarity of leisure time, substitutability of time in the production of child services, and added worker effects.
This paper contributes to the debate regarding trends in consumption inequality in the United States. We present a new measure of consumption inequality based on the redesigned 1999-2011 PSID. We ...impute consumption to the families observed before 1999 using the more comprehensive consumption data available from 1999 onward. One advantage of this procedure is in sample verification of the quality of the imputation procedure; another is that it yields a long time series (1967-2010). Consumption inequality was stable in the 1970s, as was income inequality. It increased significantly after 1980. The Great Recession was associated with a decline in consumption inequality.
The insurance role of the firm Guiso, Luigi; Pistaferri, Luigi
The Geneva risk and insurance review,
03/2020, Letnik:
45, Številka:
1
Journal Article
Recenzirano
We review the recent literature on the risk-sharing role of the firm. We provide a framework for studying risk sharing between workers and firm owners vis-à-vis firm’s specific shocks of different ...nature. We show how this framework can be taken to the data to provide estimates of the extent of insurance within the firm. Estimates from a large number of Western countries strongly support the view that in capitalist economies the firm is a large albeit far from complete wage insurance instrument. We quantify the welfare benefits of firm-provided wage insurance, show evidence on how workers react to firm’s shocks passed through wages, and discuss the future role of the firm as a wage insurance provider.
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