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Moving Back Home: Insurance against Labor Market Risk

This paper demonstrates that the option to move in and out of the parental home is a valuable insurance channel against labor market risk, which facilitates the pursuit of jobs with the potential for high earnings growth. Using monthly panel data, I document an empirical relationship among coresidence, individual labor market events, and subsequent earnings growth. I estimate the parameters of a dynamic game between youths and parents to show that the option to live at home can account for features of aggregate data for low-skilled young workers: small consumption responses to shocks, high labor elasticities, and low savings rates.

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File URL: http://dx.doi.org/10.1086/666588
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/666588
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 120 (2012)
Issue (Month): 3 ()
Pages: 446 - 512

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Handle: RePEc:ucp:jpolec:doi:10.1086/666588
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Moving Back Home: Insurance against Labor Market Risk (JPE 2012) in ReplicationWiki
  2. Economic Logic blog

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