Consumption Inequality and Family Labor Supply

By Richard Blundell, Luigi Pistaferri, Itay Saporta-Eksten. Social Science Research Network, 2014

429 citations recorded by the source corpus.

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 labour supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of males and females permanent shocks to wages. Once family labor supply, assets and taxes are properly accounted for their is little evidence of additional insurance.

Subfields: Accounting, Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/e0496123d76b69d4244532b16e8f24e8f3ea8a4b

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

In Gender Studies

Citations in the corpus

From Mancession to Shecession: Women’s Employment in Regular and Pandemic Recessions (2021, background): “Blundell, Pistaferri, and Saporta-Eksten (2016) show that within-family insurance is the primary insurance channel formany households, and Bardóczy (2020) argues that this insurance channel plays a central role in the transmission of aggregate shocks.”
Disability Benefits, Consumption Insurance, and Household Labor Supply (2019, positive): “This is the form of the objective function in Equation (13) of Blundell et al. (2016a) and is motivated by the finding of Altonji & Segal (1996) that the asymptotically efficient weighting matrix has poor small-sample properties.”
Labor Income Dynamics and the Insurance from Taxes, Transfers, and the Family (2014, background): “This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/3.0/).”
Savings After Retirement: A Survey (2016, positive): “For example, Blundell et al. (2016a) show that between 2002 and 2012 the median nonhousing wealth of elderly US households declined by close to 50% (Figure 11a), whereas median housing wealth declined by approximately 30% (Figure 11b).”
Consumer Spending during Unemployment: Positive and Normative Implications (2019, neutral): “16See Browning and Crossley (2001), Bloemen and Stancanelli (2005) and Kolsrud et al.”
Labor Supply and Taxes: A Survey (2011, neutral): “As Pencavel notes, if both leisure and the composite consumption good (Ct) are normal goods, then ie must be between 0 and −1. Indeed, we see from (10) that ie approaches –1 as η < 0 goes to negative infinity. But Pencavel (1986) argues that values of ie near –1 are implausible.”
Comparing Labor Supply Elasticities in Europe and the US: New Results (2012, result): “However, our main results show that it is not the case the cross-country correlation between elasticities of married and single women is positive (:25) and thus this possible explanation can be ruled out.”