Consumption Inequality and Family Labor Supply

Richard Blundell (), Luigi Pistaferri and Itay Saporta-Eksten
Authors registered in the RePEc Author Service: Itay Saporta Eksten

American Economic Review, 2016, vol. 106, issue 2, 387-435

Abstract: 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. (JEL D12, D14, D91, J22, J31)

JEL-codes: D12 D14 D91 J22 J31 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20121549
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Citations: View citations in EconPapers (336)

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Related works:
Working Paper: Consumption inequality and family labor supply (2014)
Working Paper: Consumption inequality and family labor supply (2014)
Working Paper: Consumption Inequality and Family Labor Supply (2012)
Working Paper: Consumption Inequality and Family Labor Supply (2012)
Working Paper: Consumption Inequality and Family Labor Supply (2012)
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