From standard portfolio-choice theory it is well-understood that background risk, overwhelmingly due to wage risk, is … one of the central determinants of individuals’ portfolio composition: higher background risk reduces risky investments …. However, if background risk is negatively correlated with financial market risk, higher background risk implies more risky …

against non-diversifiable labor income risk. We then use our our theory to link openness to trade to the level of …In simple one-good international macro models, the presence of non-diversifiable labor income risk means that country …

against non-diversifiable labor income risk. We then use our our theory to link openness to trade to the level of …In simple one-good international macro models, the presence of non-diversifiable labor income risk means that country …

theory suggests that with increasing labor income risk, the reluctance of households to hold stocks increases. We propose to … measure income risk as the observed variation of household income over a five year period. We find that indeed higher income … risk reduces the propensity to invest in stocks. However, when controlling for household heterogeneity as well as …