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Measuring economic insecurity: a simulation approach

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  • Richiardi, Matteo
  • He, Zhechun

Abstract

We suggest a new individual-based measure of economic insecurity where expectations about the future evolution of individual life courses are derived from a dynamic simulation model. This allows to take into account risks over many dimensions including work, family and health. On the earning side, we summarise the uncertainty over future income trajectories with a monotonically increasing concave function of income, which penalises income volatility over time and over possible individual trajectories while assigning higher value to higher levels of economic resources available. On the expenditure side, we take into account different household characteristics by means of appropriate equivalence scales.

Suggested Citation

  • Richiardi, Matteo & He, Zhechun, 2020. "Measuring economic insecurity: a simulation approach," Centre for Microsimulation and Policy Analysis Working Paper Series CEMPA2/20, Centre for Microsimulation and Policy Analysis at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:cempwp:cempa2-20
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    References listed on IDEAS

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