FROM THE PEAKS TO THE VALLEYS: CROSS-STATE EVIDENCE ON INCOME VOLATILITY OVER THE BUSINESS CYCLE

• 成果类型: Article
• 署名作者: Carey, Colleen; Shore, Stephen H.
• 署名单位: Johns Hopkins University; University System of Georgia; Georgia State University
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00299
• 发表日期: 2013-05
• 页码: 549-562
• 关键词: UNITED-STATES; idiosyncratic risk; recessions good; welfare cost; labor-market; GROWTH; wages; INEQUALITY; DYNAMICS; HEALTH

摘要

Countercyclical variation in individuals' idiosyncratic labor income risk could generate substantial welfare costs. Following past research, we infer income volatility the variance of permanent income shocks, a standard proxy for income risk from the rate at which cross-sectional variances of income rise over the life cycle for a given cohort. Our novelty lies in exploiting cross-state variation in state economic conditions or state sensitivity to national economic conditions. We find that income volatility is higher in good state times than bad; during good national times, we find volatility is higher in states that are more sensitive to national conditions.