The Nature of Household Labor Income Risk (WP) w/ Turner

with N. Turner


What is the nature of labor income risk facing households? We answer this question using detailed administrative data on 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 alone. Second, households face roughly half the countercyclical increase in risk that males face. Third, spousal labor income ameliorates household earnings risk via both extensive and intensive margins.