Wage Risk and Government and Spousal Insurance

• 成果类型: Article
• 署名作者: De Nardi, Mariacristina; Fella, Giulio; Paz-Pardo, Gonzalo
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Minnesota System; University of Minnesota Twin Cities; Center for Economic & Policy Research (CEPR); National Bureau of Economic Research; University of London; Queen Mary University London; University of Bologna; European Central Bank
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdae042
• 发表日期: 2024
• 页码: 954-980
• 关键词: married-couples; LABOR; earnings; consumption; taxation; MARKET

摘要

The extent to which households can self-insure depends on family structure and wage risk. We calibrate a model of couples and singles' savings and labour supply under two types of wage processes. The first wage process is the canonical-age-independent, linear-one that is typically used to evaluate government insurance provision. The second wage process is a flexible one. We use our model to evaluate the optimal mix of the two most common types of means-tested benefits-IW versus income floor. The canonical wage process underestimates wage persistence for women and thus implies that IW benefits should account for most benefit income. In contrast, the richer wage process that matches the wage data well, implies that the income floor should be the main benefit source, similarly to the system in place in the U.K. This stresses that allowing for rich wage dynamics is important to properly evaluate policy.