This paper assesses the quantitative importance of a number of sources of income risk for household welfare and … precautionary saving. To that end I construct a lifecycle consumption model in which household income is subject to shocks … associated with disability, health, unemployment, job changes, wages, work hours, and a residual component of household income. I …

The issue of whether higher lifetime income households save a larger fraction of their income is an important factor in … empirical methods and the Panel Study on Income Dynamics, the Survey of Consumer Finances, and the Consumer Expenditure Survey … income groups: differences in Social Security benefits, different time preference rates, non-homothetic preferences, bequest …

significant effects of age, wealth, income risk, and entry/information costs. …

We propose a novel approach to estimate household income uncertainty at various future horizons and characterize how … the estimated uncertainty evolves over the life cycle. We measure income uncertainty as the variance of linear forecast … errors conditional on information available to households prior to observing the realized income. This approach is …

simple two-period savings model. Our main conclusion is that, when there is sufficient income uncertainty, a person resists … lowering consumption in response to bad news about future income, and this resistance is greater than the resistance to …