The Nature of Household Labor Income Risk

Pruitt, Seth; Turner, Nicholas

doi:10.17016/FEDS.2018.034

Working Paper

The Nature of Household Labor Income Risk

Abstract: What is the nature of labor income risk facing households? We answer this question using detailed administrative data on household earnings from the U.S. Internal Revenue Service. By analyzing total household labor earnings as well as each member's earnings, we offer several new findings. One, households face substantially less risk than males in isolation. Second, households face roughly half the countercyclical increase in risk that males face. Third, spousal labor income ameliorates household earnings risk through both extensive and intensive margins.

Keywords: Earnings risk; Household labor dynamics;

JEL Classification: J21; E24; D13; E32;

https://doi.org/10.17016/FEDS.2018.034