How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income

• 成果类型: Article
• 署名作者: Golosov, Mikhail; Graber, Michael; Mogstad, Magne; Novgorodsky, David
• 署名单位: University of Chicago; National Bureau of Economic Research; Statistics Norway; University of London; London School Economics & Political Science; Australian National University
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjad053
• 发表日期: 2024
• 页码: 1321-1395
• 关键词: LABOR SUPPLY EVIDENCE; liquidity constraints; housing wealth; taxable income; UNITED-STATES; entrepreneurship; opportunity; consumption; retirement; inheritance

摘要

We study how Americans respond to idiosyncratic and exogenous changes in household wealth and unearned income. Our analyses combine administrative data on U.S. lottery winners with an event study design. We first examine individual and household earnings responses to these windfall gains, finding significant and sizable wealth and income effects. On average, an extra $1 of unearned income in a given period reduces household labor earnings by about 50 cents, decreases total labor taxes by 10 cents, and increases consumption expenditure by 60 cents. These effects are heterogeneous across the income distribution, with households in higher quartiles of the income distribution reducing their earnings by a larger amount. Next we examine margins of adjustment other than earnings and, in the course of doing so, address a number of important economic questions about how additional wealth or unearned income affect retirement decisions and labor market dynamics, family formation and dissolution, entrepreneurship and self-employment, and geographic mobility and neighborhood choice. Last, we carefully compare our findings to those reported in existing lottery studies. This comparison reveals that existing U.S. studies substantially underestimate wealth and income effects because they use measures that understate the earnings responses and overstate the after-tax wealth changes associated with lottery wins.