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Earnings Risk in the Household: Evidence from Millions of US Tax Returns

Seth Pruitt and Nicholas Turner

American Economic Review: Insights, 2020, vol. 2, issue 2, 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.

JEL-codes: D12 D13 E32 G51 (search for similar items in EconPapers)
Date: 2020
Note: DOI: 10.1257/aeri.20190096
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Handle: RePEc:aea:aerins:v:2:y:2020:i:2:p:237-54