eprintid: 2854
rev_number: 14
eprint_status: archive
userid: 150
dir: disk0/00/00/28/54
datestamp: 2007-03-19 12:00:00
lastmod: 2015-07-23 09:33:28
status_changed: 2008-01-09 13:42:35
type: working_paper
metadata_visibility: show
item_issues_count: 0
creators_name: Blundell, R.
creators_name: Pistaferri, L.
creators_name: Preston, I.
creators_id: RBLUN25
creators_id: 
creators_id: IPPRE90
title: Consumption inequality and partial insurance
ispublished: pub
subjects: 12055
subjects: 12000
divisions: F24
keywords: JEL classification: D52, D91, I30. Consumption, insurance, inequality
abstract: This paper examines the transmission of income inequality into consumption inequality and in
so doing investigates the degree of insurance to income shocks. Panel data on income from the
PSID is combined with consumption data from repeated CEX cross-sections to identify the degree
of insurance to permanent and transitory shocks. In the process we also present new evidence of
the growth in the variance of permanent and transitory shocks in the US during the 1980s. We find
some partial insurance of permanent income shocks with more insurance possibilities for the college
educated and those nearing retirement. We find little evidence against full insurance for transitory
income shocks except among low income households. Tax and welfare benefits are found to play
an important role in insuring permanent shocks. Adding durable expenditures to the consumption
measure suggests that durable replacement is an important insurance mechanism, especially for
transitory income shocks.
date: 2004-11
date_type: published
publisher: Institute for Fiscal Studies
official_url: http://dx.doi.org/10.1920/wp.ifs.2004.0428
vfaculties: VSHS
oa_status: green
language: eng
primo: open
primo_central: open_green
lyricists_name: Blundell, R
lyricists_id: RBLUN25
full_text_status: public
series: IFS Working Papers
number: W04/28
place_of_pub: London, UK
issn: 1742-0415
citation:        Blundell, R.;    Pistaferri, L.;    Preston, I.;      (2004)    Consumption inequality and partial insurance.                    (IFS Working Papers  W04/28). Institute for Fiscal Studies: London, UK.       Green open access   
 
document_url: https://discovery.ucl.ac.uk/id/eprint/2854/1/2854.pdf