Federico Zilio, Melbourne Institute - Earnings and income risks: evidence from Australian tax data

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Title: Earnings and income risks: evidence from Australian tax data

Abstract: Using Australian Longitudinal Tax data, we study earnings and income risks experienced by Australian workers. We characterize the distribution of earnings and income growth and show deviations of the distributions from normality and linearity. In particular we find that the distributions of earnings and income growth display negative skewness and high kurtosis. Skewness becomes more negative for older workers and those at the top of the earnings distribution. Kurtosis is the highest for older workers and those in the middle of the earnings distribution. We also explore the role of welfare, investment and spouse earnings as insurance mechanisms from earnings risk and find that welfare is the most relevant channel to insure income. Finally, we estimate the impulse response function and show that negative earnings changes are more persistent for workers at the top of the earnings distribution than those at the bottom.

Presenter: Federico Zilio, Melbourne Institute

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