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Consumption inequality and family labor supply

Luigi Pistaferri (), Itay Saporta-Eksten and Richard Blundell ()
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Itay Saporta-Eksten: Stanford University

Authors registered in the RePEc Author Service: Itay Saporta Eksten ()

No 322, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that incorporates household consumption and family labor supply decisions. We derive analytical expressions based on approximations for the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non-separability and asset accumulation decisions. We show how the model can be estimated and identified using panel data for hours, earnings, assets and consumption. We focus on the importance of family labor supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of male’s and female’s permanent shocks to wages. Once family labor supply, assets and taxes are properly accounted for their is little evidence of additional insurance.

Date: 2014
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Related works:
Journal Article: Consumption Inequality and Family Labor Supply (2016) Downloads
Working Paper: Consumption inequality and family labor supply (2014) Downloads
Working Paper: Consumption Inequality and Family Labor Supply (2012) Downloads
Working Paper: Consumption Inequality and Family Labor Supply (2012) Downloads
Working Paper: Consumption Inequality and Family Labor Supply (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:322

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