“Consumption response to offspring’s income risk”

by Francesco Scervini, Serena Trucchi; CeRP WP 196/19

In this paper we study whether the response of consumption to income risk has an intergenerational component, namely whether and to what extent income uncertainty of young generations affects consumption of their parents. For this purpose, we exploit a cross-country European longitudinal dataset collecting information about parents and offspring, augmented with indicators for children’s income risk. Consumption turns out to significantly respond to changes in income risk, also across generations. This finding is robust to several checks and it displays heterogeneity across countries.

Published: November 2019