Intra-Household Insurance and the Intergenerational Transmission of Income Risk

Francesco Agostinelli (), Domenico Ferraro (), Xincheng Qiu and Giuseppe Sorrenti ()
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Francesco Agostinelli: University of Pennsylvania
Domenico Ferraro: Arizona State University
Giuseppe Sorrenti: University of Amsterdam

No 2024-002, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: This paper studies the mechanisms and the extent to which parental wage risk passes through to children’s skill development. Through a quantitative dynamic labor supply model in which two parents choose whether to work short or long hours or not work at all, time spent with children, and child-related expenditures, we find that income risk impacts skill accumulation, permanently lowering children’s skill levels. To the extent that making up for cognitive skill losses during childhood is hard—as available evidence suggests—uninsurable income risk can negatively impact the labor market prospects of future generations.

Keywords: wage risk; household labor supply; Child Development; social insurance (search for similar items in EconPapers)
JEL-codes: D10 J13 J22 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-dem and nep-lab
Note: ECI
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Agosti ... n-trans-inc-risk.pdf First version, January 2024 (application/pdf)

Related works:
Working Paper: Intra-Household Insurance and the Intergenerational Transmission of Income Risk (2024)
Working Paper: Intra-Household Insurance and the Intergenerational Transmission of Income Risk (2024)
Working Paper: Intra-Household Insurance and the Intergenerational Transmission of Income Risk (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2024-002

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