Relative wage movements and the distribution of consumption:
We analyze how relative wage movements across birth cohorts and education groups during the 1980s affected the distribution of household consumption. The analysis integrates the labor economics literature on time variation in the wage structure with the consumption insurance literature. In contrast...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
1994
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| Schriftenreihe: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
4771 |
| Schlagworte: | |
| Zusammenfassung: | We analyze how relative wage movements across birth cohorts and education groups during the 1980s affected the distribution of household consumption. The analysis integrates the labor economics literature on time variation in the wage structure with the consumption insurance literature. In contrast to previous tests of consumption insurance, we examine the impact of systematic, publicly observable shifts in the hourly wage structure. To circumvent the extreme scarcity of longitudinal data with high quality information on both consumption and labor market outcomes, we draw upon the best available cross-sectional data sources to construct synthetic panel data on consumption, labor supply and wages. We find that low-frequency movements in the cohort-education structure of pre-tax hourly wages drove large changes in the distribution of household consumption. The results constitute a spectacular failure of the consumption insurance hypothesis, and one that is not explained by existing theories of informationally constrained optimal consumption allocations. We also develop a procedure for assessing the welfare consequences of deviations from full consumption insurance and, in particular, from the failure to insulate the consumption distribution from relative wage shifts across cohort-education groups. For a coefficient of relative risk aversion equal to two, fully insulating households from group-specific endowment variation would raise welfare by an amount equivalent to a uniform 2.7% consumption increase. |
| Beschreibung: | 45 S. graph. Darst. |
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| 520 | |a We analyze how relative wage movements across birth cohorts and education groups during the 1980s affected the distribution of household consumption. The analysis integrates the labor economics literature on time variation in the wage structure with the consumption insurance literature. In contrast to previous tests of consumption insurance, we examine the impact of systematic, publicly observable shifts in the hourly wage structure. To circumvent the extreme scarcity of longitudinal data with high quality information on both consumption and labor market outcomes, we draw upon the best available cross-sectional data sources to construct synthetic panel data on consumption, labor supply and wages. We find that low-frequency movements in the cohort-education structure of pre-tax hourly wages drove large changes in the distribution of household consumption. The results constitute a spectacular failure of the consumption insurance hypothesis, and one that is not explained by existing theories of informationally constrained optimal consumption allocations. We also develop a procedure for assessing the welfare consequences of deviations from full consumption insurance and, in particular, from the failure to insulate the consumption distribution from relative wage shifts across cohort-education groups. For a coefficient of relative risk aversion equal to two, fully insulating households from group-specific endowment variation would raise welfare by an amount equivalent to a uniform 2.7% consumption increase. | ||
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| geographic | USA |
| geographic_facet | USA |
| id | DE-604.BV009893485 |
| illustrated | Illustrated |
| indexdate | 2024-07-09T17:42:42Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-006550989 |
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| physical | 45 S. graph. Darst. |
| publishDate | 1994 |
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| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Attanasio, Orazio P. 1959- Verfasser (DE-588)129180084 aut Relative wage movements and the distribution of consumption Orazio Attanasio ; Steven J. Davis Cambridge, Mass. 1994 45 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 4771 We analyze how relative wage movements across birth cohorts and education groups during the 1980s affected the distribution of household consumption. The analysis integrates the labor economics literature on time variation in the wage structure with the consumption insurance literature. In contrast to previous tests of consumption insurance, we examine the impact of systematic, publicly observable shifts in the hourly wage structure. To circumvent the extreme scarcity of longitudinal data with high quality information on both consumption and labor market outcomes, we draw upon the best available cross-sectional data sources to construct synthetic panel data on consumption, labor supply and wages. We find that low-frequency movements in the cohort-education structure of pre-tax hourly wages drove large changes in the distribution of household consumption. The results constitute a spectacular failure of the consumption insurance hypothesis, and one that is not explained by existing theories of informationally constrained optimal consumption allocations. We also develop a procedure for assessing the welfare consequences of deviations from full consumption insurance and, in particular, from the failure to insulate the consumption distribution from relative wage shifts across cohort-education groups. For a coefficient of relative risk aversion equal to two, fully insulating households from group-specific endowment variation would raise welfare by an amount equivalent to a uniform 2.7% consumption increase. Consumptie gtt Huishoudingen gtt Salarissen gtt Ökonometrisches Modell Consumption (Economics) United States Econometric models Income distribution United States Wages United States Econometric models USA Davis, Steven J. 1957- Verfasser (DE-588)129367141 aut National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 4771 (DE-604)BV002801238 4771 |
| spellingShingle | Attanasio, Orazio P. 1959- Davis, Steven J. 1957- Relative wage movements and the distribution of consumption National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Consumptie gtt Huishoudingen gtt Salarissen gtt Ökonometrisches Modell Consumption (Economics) United States Econometric models Income distribution United States Wages United States Econometric models |
| title | Relative wage movements and the distribution of consumption |
| title_auth | Relative wage movements and the distribution of consumption |
| title_exact_search | Relative wage movements and the distribution of consumption |
| title_full | Relative wage movements and the distribution of consumption Orazio Attanasio ; Steven J. Davis |
| title_fullStr | Relative wage movements and the distribution of consumption Orazio Attanasio ; Steven J. Davis |
| title_full_unstemmed | Relative wage movements and the distribution of consumption Orazio Attanasio ; Steven J. Davis |
| title_short | Relative wage movements and the distribution of consumption |
| title_sort | relative wage movements and the distribution of consumption |
| topic | Consumptie gtt Huishoudingen gtt Salarissen gtt Ökonometrisches Modell Consumption (Economics) United States Econometric models Income distribution United States Wages United States Econometric models |
| topic_facet | Consumptie Huishoudingen Salarissen Ökonometrisches Modell Consumption (Economics) United States Econometric models Income distribution United States Wages United States Econometric models USA |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT attanasiooraziop relativewagemovementsandthedistributionofconsumption AT davisstevenj relativewagemovementsandthedistributionofconsumption |