Beschreibung:
Higher income volatility is associated with a higher risk and a reduction in well-being. Income volatility is widely studied in many advanced economies, yet little is known about income volatility in China. In this paper we document trends in earnings volatility and household income volatility in urban China and examine what are the driving forces. Using China Urban Household Survey 2002-2009, we find that earnings volatility is higher for older, less educated, and unmarried individuals. Working in service industry and non-SOEs also face higher income volatility. Decomposition analysis suggests that couple’s earnings shocks are positively correlated, while transfer income and other income help in smoothing out head’s earnings shocks. In addition, transfer income and other non-transfer income plays a larger role in smoothing out head’s earnings shocks for poorer households