Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296003 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 10914
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies the mechanisms and the extent to which parental wage risk passes through to children's skill development. Through a quantitative dynamic labor supply model in which two parents choose whether to work short or long hours or not work at all, time spent with children, and child-related expenditures, we find that income risk impacts skill accumulation, permanently lowering children's skill levels. To the extent that making up for cognitive skill losses during childhood is hard—as available evidence suggests—uninsurable income risk can negatively impact the labor market prospects of future generations.
Subjects: 
wage risk
household labor supply
child development
social insurance
JEL: 
D10
J13
J22
Document Type: 
Working Paper
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