We develop a model of education where individuals face educational risk. Successfully entering the skilled labor sector … depends on individual effort in education and public resources, but educational risk still causes (income) inequality. We show … in a Second-best setting. Contrary to standard models of income risk, it is not optimal to use a proportional wage tax …

How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor …-income risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

In this model of education, where individuals are exposed both to educational risk and to wage risk within the skilled … present risks is a dichotomic task: Wage risk is diversified ex post among the skilled by graduate taxation and skill …-specific tuition fees. Educational risk of failure and inequality between skilled and unskilled workers are mitigated ex ante by …

We explore the impact of mortgage securitization on the international diversification of macroeconomic risk. By making … risk sharing: we find that countries with the most highly developed markets for securitized mortgage debt have consumption … risk sharing in tranquil times but that it actually fails to provide international insurance in severe crisis periods …

risk diversification across working-life wages in computing benefits. … turns out to decrease ex-ante individual welfare, unless restrictions are assumed on retirement behavior. Overall, risk … shown to yield a slight ex-ante welfare improvement from a purely risk-insurance perspective. This relative gain stems from …