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Family labor supply and asset returns

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  • Daminato, Claudio
  • Pistaferri, Luigi

Abstract

We study how shocks to wages and asset prices affect consumption and labor supply decisions of two-earner households in a life-cycle framework with housing and flexible preferences. We provide a micro-foundation of the wealth effects on consumption and labor supply. We find evidence for non-separability between non-durable consumption, housing services and hours of work. The results also highlight the importance of family labor supply in understanding how households respond to shocks to financial and housing markets.

Suggested Citation

  • Daminato, Claudio & Pistaferri, Luigi, 2020. "Family labor supply and asset returns," European Economic Review, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:eecrev:v:124:y:2020:i:c:s0014292120300210
    DOI: 10.1016/j.euroecorev.2020.103389
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    More about this item

    Keywords

    Wealth effect; Consumption; Labor supply;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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