CeMPA Working Paper Series CeMPA WP 2/20
Measuring economic insecurity: a simulation approach
Authors
Publication date
26 Jun 2020
Abstract
We suggest a new individual-based measure of economic insecurity where expectations about the future evolution of individual life courses are derived from a dynamic simulation model. This allows to take into account risks over many dimensions including work, family and health. On the earning side, we summarise the uncertainty over future income trajectories with a monotonically increasing concave function of income, which penalises income volatility over time and over possible individual trajectories while assigning higher value to higher levels of economic resources available. On the expenditure side, we take into account different household characteristics by means of appropriate equivalence scales.
Subjects
Households, Economics, Income Dynamics, Microsimulation, and Life Course Analysis
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