Earnings Risk in the Household: Evidence from Millions of US Tax Returns
American Economic Review: Insights
vol. 2,
no. 2, June 2020
(pp. 237-54)
Abstract
Using detailed Internal Revenue Service administrative data on millions of households, we find that households effectively insure against much of the risk facing primary earners. We show that households face less risk than males alone, and households face roughly half the countercyclical risk increase. As a result of these risk differences, household certainty equivalent earnings are 19 percent higher than for males alone, and household certainty equivalent earnings fall by about half as much during recessions. To facilitate related research, we make available the aggregated data used in our analysis.Citation
Pruitt, Seth, and Nicholas Turner. 2020. "Earnings Risk in the Household: Evidence from Millions of US Tax Returns." American Economic Review: Insights, 2 (2): 237-54. DOI: 10.1257/aeri.20190096Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D13 Household Production and Intrahousehold Allocation
- E32 Business Fluctuations; Cycles
- G51 Household Saving, Borrowing, Debt, and Wealth