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The Two-Income Trap: Are Two-Earner Households More Financially Vulnerable?

Author

Listed:
  • Jonathan Fisher
  • Nathaniel Johnson

Abstract

We test whether two-earner married couples are more likely to file for consumer bankruptcy in the future than similar married couples. Since two-earner households are unable to adjust their income on the extensive margin, they are more vulnerable to income shocks, and thus at risk of bankruptcy in the future. We find that two-earner married couples in 1999 are more likely to file for bankruptcy from 2002-2004 compared to other married couples. Additionally, we present supporting information that suggests that two-earner households have a higher average propensity to consume.

Suggested Citation

  • Jonathan Fisher & Nathaniel Johnson, 2019. "The Two-Income Trap: Are Two-Earner Households More Financially Vulnerable?," Working Papers 19-19, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:19-19
    as

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    File URL: https://www2.census.gov/ces/wp/2019/CES-WP-19-19.pdf
    File Function: First version, 2019
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    added worker; personal bankruptcy;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K3 - Law and Economics - - Other Substantive Areas of Law

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