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Moving Back Home: Insurance against Labor Market Risk

Author(s): Kaplan, Greg

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Abstract: 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. © 2012 by The University of Chicago.
Publication Date: 1-Jun-2012
Citation: Kaplan, G. (2012). Moving Back Home: Insurance against Labor Market Risk. Journal of Political Economy, 120 (3), 446 - 512. doi:10.1086/666588
DOI: doi:10.1086/666588
ISSN: 0022-3808
Pages: 446 - 512
Type of Material: Journal Article
Journal/Proceeding Title: Journal of Political Economy
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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