IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v106y2024i2p423-436.html
   My bibliography  Save this article

Transmission of Income Variations to Consumption Variations: The Role of the Firm

Author

Listed:
  • Miao Jin

    (Renmin University of China)

  • Yu-Jane Liu

    (Peking University)

  • Juanjuan Meng

    (Peking University)

  • Yu Zhang

    (Peking University)

Abstract

We use matched employer-employee data to study the role of the firm in the transmission of income growth into consumption growth. We find that growth in income relative to the firm average (the within-firm component) translates significantly less into consumption than growth in firm average income (the between-firm component). These findings are explained by the lower persistence of the within-firm component of income, better self-insurance for workers more exposed to variations in income growth from the within-firm component, and peer effects in the workplace. Quantitatively, income persistence provides 43% of the explanatory power, self-insurance provides 35%, and peer effects provide 22%.

Suggested Citation

  • Miao Jin & Yu-Jane Liu & Juanjuan Meng & Yu Zhang, 2024. "Transmission of Income Variations to Consumption Variations: The Role of the Firm," The Review of Economics and Statistics, MIT Press, vol. 106(2), pages 423-436, March.
    • Handle: RePEc:tpr:restat:v:106:y:2024:i:2:p:423-436
    DOI: 10.1162/rest_a_01157
    as

    Download full text from publisher

    File URL: https://doi.org/10.1162/rest_a_01157
    Download Restriction: Access to PDF is restricted to subscribers.
    File URL: https://libkey.io/10.1162/rest_a_01157?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:106:y:2024:i:2:p:423-436. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.