EconPapers    
Economics at your fingertips  
 

Household risk‐sharing channels

Pierfederico Asdrubali, Simone Tedeschi and Luigi Ventura ()

Quantitative Economics, 2020, vol. 11, issue 3, 1109-1142

Abstract: This paper aims to fill the gaps in the analysis of risk‐sharing channels at the microlevel, both within and across households. Using data from the Bank of Italy's Survey on Household Income and Wealth covering the financial crisis, we are able to quantify in a unified and consistent framework several risk‐sharing mechanisms that so far have been documented separately. We find that Italian households were able to smooth on average about 85% of shocks to household head's earnings in both 2008–2010 and 2010–2012 spells. The most important smoothing mechanisms turn out to be self‐insurance through savings/dissavings (40% and 47% in 2008–2010 and 2010–2012, respectively), and within‐household risk‐sharing (16% and 14%). Interestingly, risk‐sharing through portfolio diversification and private transfers is rather limited, but the overall percentage of shock absorption occurring through private risk‐sharing channels hovers around four‐fifths, as opposed to around one‐fifth of a shock cushioned by taxes and public transfers, excluding pensions. In addition, by exploiting subjective expectations on the following year's household income, we find significant evidence of a lower degree of smoothing of persistent shocks.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.3982/QE1000

Related works:
Working Paper: Household Risksharing Channels (2015) 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:wly:quante:v:11:y:2020:i:3:p:1109-1142

Ordering information: This journal article can be ordered from
https://www.econometricsociety.org/membership

Access Statistics for this article

More articles in Quantitative Economics from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2021-01-08
Handle: RePEc:wly:quante:v:11:y:2020:i:3:p:1109-1142