EconPapers    
Economics at your fingertips  
 

Consumption inequality across heterogeneous families

Alexandros Theloudis ()

European Economic Review, 2021, vol. 136, issue C

Abstract: What does preference heterogeneity imply for consumption inequality? This paper studies the link from wage to consumption inequality within a lifecycle model of consumption and family labor supply. Its distinctive feature is that households have general heterogeneous preferences over consumption and labor supply. The paper shows identification of the joint distribution of unobserved household preferences separately from the observed distributions of incomes and outcomes. Estimation on data from the Panel Study of Income Dynamics in the US reveals substantial unexplained heterogeneity in consumption preferences but little unexplained heterogeneity in labor supply preferences. Preference heterogeneity accounts for about a third of consumption inequality in recent years and implies, on average, lower partial insurance of wage shocks compared to recent studies in the literature.

Keywords: Unobserved preference heterogeneity; Family labor supply; Lifecycle model; Partial insurance; PSID (search for similar items in EconPapers)
JEL-codes: D12 D30 D91 E21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292121001185
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Consumption Inequality across Heterogeneous Families (2021) Downloads
Working Paper: Consumption inequality across heterogeneous families (2017) Downloads
Working Paper: Consumption Inequality across Heterogeneous Families (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:136:y:2021:i:c:s0014292121001185

DOI: 10.1016/j.euroecorev.2021.103765

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-06-01
Handle: RePEc:eee:eecrev:v:136:y:2021:i:c:s0014292121001185