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Title: Family and Government Insurance: Wage, Earnings, and Income Risks in the Netherlands and the U.S.

Author(s): Mariacristina De Nardi, Giulio Fella, Marike Knoef, Gonzalo Paz-Pardo and Raun Van Ooijen

Publication Date: May 2019

Keyword(s): earnings risk, family insurance, government insurance and Wage risk

Programme Area(s): Macroeconomics and Growth and Public Economics

Abstract: We document new facts on the dynamics of male wages and earnings, household earnings, and before- and after-tax income in the Netherlands and the United States. We find that, in both countries, earnings display rich dynamics, including substantial asymmetries and nonlinearities by age and previous earnings levels. Most of these dynamics, particularly in the Netherlands, are related to fluctuations in hours worked rather than in wages. Individual-level male wage and earnings risk is relatively high at the beginning and end of one's working life, and for those in the lower and upper parts of the income distribution. In the Netherlands, government transfers are a major source of insurance. They have notable effects on the standard deviation, skewness and kurtosis of income changes. In the U.S. the role of family insurance is much larger than in the Netherlands. Family and government insurance reduce, but do not eliminate non-linearities in household disposable income by age and previous earnings in both countries.

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Bibliographic Reference

De Nardi, M, Fella, G, Knoef, M, Paz-Pardo, G and Van Ooijen, R. 2019. 'Family and Government Insurance: Wage, Earnings, and Income Risks in the Netherlands and the U.S.'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13720