Essays on public and private insurance of income shocks

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dc.contributor.authorTORSTENSEN, Kjersti Næss
dc.date.accessioned2014-07-14T15:02:15Z
dc.date.available2014-07-14T15:02:15Z
dc.date.issued2014
dc.descriptionDefence date: 16 June 2014en
dc.descriptionExamining Board: Professor Árpád Ábrahám, European University Institute (Supervisor); Professor Jérôme Adda, European University Institute; Professor Claudio Michelacci, CEMFI Madrid; Professor Gianluca Violante, New York University.
dc.description.abstractThis thesis explores issues related to public and private insurance of income shocks, and the importance of human capital accumulation. The first chapter argues that the intertemporal elasticity of substitution of labor supply is a state-dependent variable which strongly depends on the return to human capital accumulation. Estimating a life cycle model I find that the average i.e.s. is low (0.35), and comparable with micro estimates, even in the presence of human capital. However, the average i.e.s. hides important heterogeneity: for college graduates the i.e.s. more than doubles over the life cycle, whereas it increases by about 58 percent for workers without a college degree. The second chapter argues that heterogeneous returns to human capital accumulation affects the degree to which search effort of unemployed deviates from the socially optimal level, and the reason behind the deviation. I find that (i) the main social costs associated with unemployment insurance are not due to moral hazard problems, but are due to distortionary effects of labor income taxes needed to finance the insurance. (ii) The magnitude of the moral hazard problem and the tax distortion problem differs substantially by age and education. And, (iii) the degree of tax progressiveness and benefit regressiveness has important effects on the deviation of search effort. The third chapter studies the relation between co-movement of income shocks and precautionary asset holdings. If households perceive spousal labor supply as an insurance mechanism, it is evident that this mechanism should work better the lower the co-movement of income shocks. We find that (i) households in which both spouses have the same education level or work in the same industry have a higher correlation of income shocks compared to couples with different education/industry. And, (ii) households who face larger co-movements of income shocks hold larger precautionary buffers.
dc.format.mimetypeapplication/pdf
dc.identifier.citationFlorence : European University Institute, 2014en
dc.identifier.doi10.2870/1652
dc.identifier.urihttps://hdl.handle.net/1814/32107
dc.language.isoen
dc.publisherEuropean University Instituteen
dc.relation.ispartofseriesEUIen
dc.relation.ispartofseriesECOen
dc.relation.ispartofseriesPhD Thesisen
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subject.lcshHuman capital
dc.subject.lcshHouseholds -- Economic aspects
dc.titleEssays on public and private insurance of income shocks
dc.typeThesisen
dspace.entity.typePublication
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