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Change time endowment for married vs single filers when computing lifetime income #22

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MaxGhenis opened this issue Feb 6, 2021 · 1 comment

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@MaxGhenis
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The time endowment for computing lifetime income is currently set at 4000 hours for all households:

https://github.com/PSLmodels/OG-USA-Calibration/blob/15b6471dc8d757e0842f395ad03b4a9df91ee37a/ogusa_calibrate/psid_data_setup.py#L323

Married households should have a larger time endowment than singles.

@jdebacker
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@MaxGhenis I'm not sure what the right thing to do here is. Fullerton and Rogers (1993, p. 71) (who's methodology we are following) say:

We multiply the wage rate at each age by the assumed number of hours a year available (for example, 4,000 a year)...

While this might just be an example and they actually adjust hours available by the size of the household, I don't know.

But I think giving all households the same time endowment when computing what lifetime income group they are in might be helpful. Consider a high earning single person. Assume that this person would be in the top 1% of lifetime earners if s/he worked 4000 hours a year, but is at the 70th percentile (among all households, including those with two earners) with 2000 hours per year. When generating profiles of average hourly earnings by lifetime income group - do we want to put that high earner (one who looks a lot like the top 1% of earners if we look at her/him individually) in the bucket with the top 1% or the bucket with the 70th percentile?

I'm not sure of the right answer here. OG-USA not distinguishing between single and dual earner households also muddies the water a bit.

Thoughts?

cc @rickecon

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