Family and government insurance: Wage, earnings, and income risks in the Netherlands and the U.S.
“Family and government insurance reduce but do not eliminate earnings risk in both countries”
The dynamics and magnitude of earnings shocks have direct consequences for the pension accrual of employees and the optimal investment policy of pension assets. This study documents the distribution of male earnings shocks for different age and income groups. Furthermore, we examine the extent to which spousal income, government transfers, and progressive taxation mitigate earnings shocks.