TY  - JOUR
AU  - Heathcote,Jonathan
AU  - Storesletten,Kjetil
AU  - Violante,Giovanni L.
TI  - Consumption and Labor Supply with Partial Insurance: An Analytical Framework
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15257
PY  - 2009
Y2  - August 2009
UR  - http://www.nber.org/papers/w15257
L1  - http://www.nber.org/papers/w15257.pdf
N1  - Author contact info:
Jonathan Heathcote
Federal Reserve Bank of Minneapolis
Research Department
90 Hennepin Ave.
Minneapolis, MN 55401
Tel: (612) 204-6385
E-Mail: heathcote@minneapolisfed.org

Kjetil Storesletten
Federal Reserve Bank of Minneapolis
Research Department
90 Hennepin Ave.
Minneapolis, MN 55401
Tel: +47 22844009
E-Mail: kjetil.storesletten@econ.uio.no

Giovanni L. Violante
Department of Economics
New York University
19 W. 4th Street
New York, NY 10012-1119
Tel: 212/992-9771
Fax: 212/995-3932
E-Mail: glv2@nyu.edu
AB  - This paper studies consumption and labor supply in a model where agents have partial insurance and face risk and initial heterogeneity in wages and preferences. Equilibrium allocations and variances and covariances of wages, hours and consumption are solved for analytically. We prove that all parameters of the structural model are identified given panel data on wages and hours, and cross-sectional data on consumption. The model is estimated on US data. Second moments involving hours and consumption show that the rise in wage dispersion in the 1970s was effectively insured by households, while the rise in the 1980s was not.
ER  -