Data and Code for: Consumption Insurance Against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation

Version
1
Resource Type
Dataset
Creator
  • Wu, Chunzan (Peking University)
  • Krueger, Dirk (University of Pennsylvania, CEPR, CFS, NBER, and Netspar)
Publication Date
2020-12-18
Description
  • Abstract

    We show that a calibrated life-cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri and Saporta-Eksten (2016) in U.S. data. In the model, 35% of male and 18% of female permanent wage shocks pass through to consumption, compared to the empirical estimates of 32% and 19%. Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply response of the female earner. Abstracting from this private intra-household income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the welfare gains from implementing the optimal system are cut roughly in half.

Temporal Coverage
  • 1999-01-01 / 2009-12-31
    Time Period: Fri Jan 01 00:00:00 EST 1999--Thu Dec 31 00:00:00 EST 2009
Geographic Coverage
  • United States
Availability
Download
This study is freely available to the general public via web download.
Relations
  • Is version of
    DOI: 10.3886/E115388
Publications
  • Wu, Chunzan, and Dirk Krueger. “Consumption Insurance Against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation.” American Economic Journal: Macroeconomics, n.d.
  • Wu, Chunzan, and Dirk Krueger. “Supplementary Data for: Consumption Insurance Against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation.” ICPSR - Interuniversity Consortium for Political and Social Research, 2019. https://doi.org/10.3886/E116881V1.
    • ID: 10.3886/E116881V1 (DOI)

Update Metadata: 2020-12-18 | Issue Number: 1 | Registration Date: 2020-12-18