[en] This paper develops normative approaches for measuring individual-level income insecurity. Using concepts derived from Expected Utility Theory and Prospect Theory, we build a suite of measures designed to capture various facets of psychologically distressing income risk. We present an application for the US and Germany from 1993-2013, employing conditionally heteroskedastic fixed-effects models to generate predictive densities for future incomes. Our results reveal much higher levels of income risk in the US relative to Germany, which can be mostly attributed to a higher level of autonomous, time-invariant volatility. State-by-state variations in liberal/conservative political administrations partially explain our results, and we find some evidence that trade exposure is a contributing factor in the US.
Disciplines :
Social economics
Author, co-author :
d'ambrosio, Conchita ; University of Luxembourg > Faculty of Language and Literature, Humanities, Arts and Education (FLSHASE) > Integrative Research Unit: Social and Individual Development (INSIDE)
Rohde, Nicholas; Griffith University
Tang, Kam Ki; University of Queensland
Osberg, Lars; Dalhousie University
Rao, Prasada; University of Queensland
External co-authors :
yes
Language :
English
Title :
Welfare-Based Income Insecurity in the US and Germany: Evidence from Harmonized Panel Data
Publication date :
2020
Journal title :
Journal of Economic Behavior and Organization
ISSN :
0167-2681
eISSN :
1879-1751
Publisher :
Elsevier, Netherlands
Volume :
176
Pages :
226-243
Peer reviewed :
Peer Reviewed verified by ORBi
FnR Project :
FNR12677653 - Financial Strain And Economic Instability: Effects On Wellbeing And Behaviour Over The Life Course, 2018 (01/09/2019-31/08/2022) - Conchita D'ambrosio