scholarly journals The Evolution of Income Risk and Consumption Insurance in South Korea over the Last Two Decades

2020 ◽  
Author(s):  
Taehyun Ahn ◽  
Chung Gu Chee ◽  
Seonghoon Kim
Keyword(s):  
South Korea ◽  
Income Risk ◽  
Consumption Insurance

scholarly journals Tax Reform and Automatic Stabilization

2002 ◽  
Vol 92 (3) ◽  
pp. 411-433 ◽  
Author(s):  
Thomas J Kniesner ◽  
James P Ziliak
Keyword(s):  
Income Tax ◽  
Panel Study ◽  
Welfare Cost ◽  
Risk Averse ◽  
Income Dynamics ◽  
Income Risk ◽  
Tax Reforms ◽  
Automatic Stabilization ◽  
Consumption Insurance ◽  
Federal Income Tax

An income tax provides implicit insurance by dampening the variability of disposable income and consumption. Using an empirical framework derived from the consumption insurance literature and data from the Panel Study of Income Dynamics we examine the effect of federal income tax reforms of the 1980's on automatic stabilization of consumption. Overall, ERTA and TRA86 reduced consumption stability by about 50 percent. Recently increased EITC generosity restored or enhanced consumption insurance. The welfare cost of moving to the post-TRA86 system is sizable for relatively risk-averse households facing large income risk but is much more modest for the typical household.

scholarly journals The Price of Growth: Consumption Insurance in China 1989–2009

2018 ◽  
Vol 10 (4) ◽  
pp. 1-35 ◽  
Author(s):  
Raül Santaeulàlia-Llopis ◽  
Yu Zheng
Keyword(s):  
Economic Growth ◽  
Growth Process ◽  
Income Shocks ◽  
Income Risk ◽  
Welfare Assessment ◽  
Household Level ◽  
Consumption Insurance ◽  
First Order ◽  
Income Data ◽  
Growing Economy

We exploit a novel and unique opportunity to document the transmission of income risk to consumption in a growing economy. Our laboratory is China, an economy that has witnessed enormous and sustained growth. We build a long panel of household-level consumption and income data. We find that consumption insurance deteriorates along the growth process with a transmission of permanent income shocks to consumption that at least triples from 1989 to 2009. Although preliminary, our welfare analysis suggests that the loss of consumption insurance can have first-order implications for the welfare assessment of economic growth. (JEL D12, E21, O12, O47, P24, P25, P36)

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