American Economic Journal: Macroeconomics
no. 1, January 2023
We employ a large panel of US income tax returns for the period 1987–2018 to extensively characterize and quantify business income risk. Our findings show business income to be much riskier than labor income. Business income is less persistent and is characterized by higher tail risk. Furthermore, when compared to labor income, heterogeneity across households is less important in explaining the cross-sectional variation in business income, and within-household income variation is more important. Our results underscore the income risks business owners face and provide stylized facts and parameter estimates useful for quantitative macroeconomic models and policy analysis.
DeBacker, Jason, Vasia Panousi, and Shanthi Ramnath.
"A Risky Venture: Income Dynamics among Pass-Through Business Owners."
American Economic Journal: Macroeconomics,
Personal Income, Wealth, and Their Distributions
Household Finance: Household Saving, Borrowing, Debt, and Wealth
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Wage Level and Structure; Wage Differentials