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From Income to Consumption: Measuring Households Partial Insurance

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  • José María Casado García

Abstract

This paper computes the degree of consumption insurance with respect to transitory and permanent income shocks for different households. The lack of income-consumption data in the US surveys forces researchers to use an empirical strategy to impute consumption. We avoid this procedure by using the Spanish Continuous Family Expenditure Survey that contains good quality income and consumption information in the same survey. We find full insurance for transitory income shocks and partial insurance for permanent shocks for some sub-groups. For the full sample, a 10 percent permanent income shock induces a 7.8 percent permanent change in consumption, with higher insurance capacity for home-owners and more educated households.

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Bibliographic Info

Paper provided by FEDEA in its series Working Papers with number 2008-09.

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Date of creation: Feb 2008
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Handle: RePEc:fda:fdaddt:2008-09

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Cited by:
  1. Pijoan-Mas, Josep & Sánchez-Marcos, Virginia, 2009. "Spain is Different: Falling Trends of Inequality," CEPR Discussion Papers 7489, C.E.P.R. Discussion Papers.
  2. Jose Maria Casado, 2012. "Consumption partial insurance of Spanish households," Banco de Espa�a Working Papers 1214, Banco de Espa�a.

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