Transmission of Income Variations to Consumption Variations: The Role of the Firm

Miao Jin, Yu-Jane Liu, Juanjuan Meng and Yu Zhang
Additional contact information
Miao Jin: Renmin University of China
Yu-Jane Liu: Peking University
Juanjuan Meng: Peking University
Yu Zhang: Peking University

The Review of Economics and Statistics, 2024, vol. 106, issue 2, 423-436

Abstract: We use matched employer-employee data to study the role of the firm in the transmission of income growth into consumption growth. We find that growth in income relative to the firm average (the within-firm component) translates significantly less into consumption than growth in firm average income (the between-firm component). These findings are explained by the lower persistence of the within-firm component of income, better self-insurance for workers more exposed to variations in income growth from the within-firm component, and peer effects in the workplace. Quantitatively, income persistence provides 43% of the explanatory power, self-insurance provides 35%, and peer effects provide 22%.

Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1162/rest_a_01157
Access to PDF is restricted to subscribers.

Related works:
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:tpr:restat:v:106:y:2024:i:2:p:423-436

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().