Three Essays on Household Consumption, Labor Supply, and Self-Insurance

Consumption Commitments;Added Worker Effect;Intergenerational Transfers;Extended Family Insurance;Parental Wealth Effect on Education;Economics;Business and Economics;Economics

Cao, YipeiStolyarov, Dmitriy L ;

University of Michigan

关键词: Consumption Commitments;    Added Worker Effect;    Intergenerational Transfers;    Extended Family Insurance;    Parental Wealth Effect on Education;    Economics;    Business and Economics;    Economics;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/146054/yipeicao_1.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

This dissertation examines the insurance mechanism within the family and also in the extended family across different generations. The three essays contribute to the understanding of how family members respond to adverse income changes and avoid sharp fluctuations in consumption.The first chapter links the added worker effect to the composition of household consumption. Committed consumption, such as housing expenses and vehicle installments, is costly to adjust. Therefore, the household is eager to maintain commitments, especially when an income fluctuation is modest or temporary. This forces a family member to supply additional market labor to avoid a sharp reduction in the flexible portion of consumption. The empirical evidence discovered in this chapter confirms that consumption commitments amplify the spousal labor supply response when the head of the family experiences a negative income change. When a household allocates more resources to infrequently adjusted goods prior to the shock, the wife is more likely to become a new entrant to the labor force and also to work more. This chapter also finds that overall responses from wives who were formerly out of labor market are more significant than those from wives already employed before the heads’ income cuts.The second chapter finds that adult children who received bigger negative income shocks dur- ing the Great Recession were more likely to move to live closer to their parents. Using intergenera- tional time transfer data from the Panel Study of Income Dynamics, this chapter confirms that adult children did use spatial closeness to facilitate time assistance from their parents, benefiting from risk sharing in the extended family. A two-generation model is used to examine the implication of time transfer. It shows how the possibility of time transfer affects the labor supply and welfare of adult children, and compares its impact with other forms of intergenerational transfers, such as financial transfers and coresidence.The third chapter utilizes short-run housing wealth changes during the recent housing bust to identify the effect of parental wealth on post-secondary educational decisions. Estimation results show that family wealth hardly affected young adults’ college enrollment or early dropout rate. However, in the face of reduced financial support from parents, college students significantly in- creased the amount of debt taken on under their own names and also chose to work more hours while in college.