Family economic insecurity in the United States

This dissertation investigates family economic insecurity in the United States, with a particular focus on the risk of a large drop in income. I ask three central questions. First, how much economic insecurity does the American family face, and how has that insecurity changed over time? Second, what explains over-time shifts in economic risk? Third, how do families perceive and manage economic risk? I address the first two questions using the Panel Study on Income Dynamics, a nationally-representative dataset spanning from 1969 to 2004. I address the third question through the analysis of in-depth interviews with a sample of employees facing an elevated risk of job loss. I find that family economic insecurity is high, and has risen over the last three decades. Income volatility has increased for all income and education groups, but the risk of a negative economic shock has grown particularly steeply for college-educated households. Neither the increased in married women's labor force participation nor the increase in divorce can explain much of the secular trend in income volatility. Individuals at risk of a large income shock are optimistic about their ability to weather hard times, but simultaneously acknowledge that job loss has the potential to send their family into a financial tailspin. Many rely on education as a coping mechanism, framing a return to school as a way to create opportunity in the face of insecurity. Dual- earner families strive to create a balance between workers, with one pursuing employment with solid benefits and security in exchange for a low earnings ceiling and the other engaged in high-risk, high-reward employment. Economic shocks to prime-age working adults have the potential to reverberate up and down the generational ladder due to this group's role as a financial support for both adult children and aging parents. Policy implications are discussed.