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How uncertain is household income in China

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  • Yu, Jihai
  • Zhu, Guozhong

Abstract

This paper studies the stochastic processes of household income in China using longitudinal data from CHNS 1989–2009. We consider both labor income and total household income. We find that (i) compared with the US households in PSID, income of the Chinese households is much more uncertain; (ii) compared with the 1990s, degree of income uncertainty in the 2000s is substantially higher in China.

Suggested Citation

  • Yu, Jihai & Zhu, Guozhong, 2013. "How uncertain is household income in China," Economics Letters, Elsevier, vol. 120(1), pages 74-78.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:1:p:74-78
    DOI: 10.1016/j.econlet.2013.03.011
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    References listed on IDEAS

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    1. Carroll, Christopher D., 2009. "Precautionary saving and the marginal propensity to consume out of permanent income," Journal of Monetary Economics, Elsevier, vol. 56(6), pages 780-790, September.
    2. Chao, Chi-Chur & Laffargue, Jean-Pierre & Yu, Eden, 2011. "The Chinese saving puzzle and the life-cycle hypothesis: A revaluation," China Economic Review, Elsevier, vol. 22(1), pages 108-120, March.
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    4. Fatih Guvenen, 2009. "An Empirical Investigation of Labor Income Processes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 58-79, January.
    5. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    6. Bonaparte, Yosef & Cooper, Russell & Zhu, Guozhong, 2012. "Consumption smoothing and portfolio rebalancing: The effects of adjustment costs," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 751-768.
    7. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 41-71, September.
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    Cited by:

    1. Ni, Xinwen, 2019. "The role of medical expenses in the saving decision of elderly: a life cycle model," IRTG 1792 Discussion Papers 2019-011, Humboldt University of Berlin, International Research Training Group 1792 "High Dimensional Nonstationary Time Series".
    2. Raül Santaeulàlia-Llopis & Yu Zheng, 2018. "The Price of Growth: Consumption Insurance in China 1989–2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(4), pages 1-35, October.
    3. Chun Chang & Kaiji Chen & Daniel F. Waggoner & Tao Zha, 2016. "Trends and Cycles in China's Macroeconomy," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 1-84.
    4. Deng, Yuanyuan & Fang, Hanming & Hanewald, Katja & Wu, Shang, 2023. "Delay the Pension Age or Adjust the Pension Benefit? Implications for Labor Supply and Individual Welfare in China," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1192-1215.
    5. Yongwei Chen & Dahai Fu, 2015. "Measuring income inequality using survey data: the case of China," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 299-307, June.
    6. İmrohoroğlu, Ayşe & Zhao, Kai, 2018. "The chinese saving rate: Long-term care risks, family insurance, and demographics," Journal of Monetary Economics, Elsevier, vol. 96(C), pages 33-52.
    7. Ha Hong Nguyen & Trung Thanh Nguyen, 2019. "Factors Affecting the Income of Vietnamese Peasants: A Case in Tra Vinh Province," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(1), pages 54-59, June.
    8. Lee, Hyun & Zhao, Kai & Zou, Fei, 2022. "Does the early retirement policy really benefit women?," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 330-345.
    9. Wang, Yan & Conesa, Juan Carlos, 2024. "Workers’ income risk and the evolution of income inequality in China," Economics Letters, Elsevier, vol. 234(C).
    10. Russell Cooper & Guozhong Zhu, 2017. "Household Finance in China," NBER Working Papers 23741, National Bureau of Economic Research, Inc.
    11. Yabin Wang & Yuhan Xue, 2019. "Income Uncertainty, Consumer Durables Investments, And Home Production: Evidence From China," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 312-331, April.
    12. İmrohoroğlu, Ayşe & Zhao, Kai, 2018. "Intergenerational transfers and China’s social security reform," The Journal of the Economics of Ageing, Elsevier, vol. 11(C), pages 62-70.

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    More about this item

    Keywords

    Income process; Income shocks; Wealth–income ratio;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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