background or insured risks. (ii) Full risk coverage by the welfare state can only be optimal in a costless welfare state. (iii …

markets are missing. The main results are: (i) outsourcing raises unemployment and labor income risk of unskilled workers; (ii …

ex ante identical households and the no-risk case with heterogeneous abilities come out as special cases. -- optimal … income ; taxation ; wage risk …

In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal … (overinvestment) in education due to risk. Education policy unambiguously allows for more social insurance if education is a risky … activity. However, if education hedges against labor market risk, optimal tax rates could be lower than without education …

entail beneficial risk-sharing and diversification features However, depending on the pension formula these features vary … significantly for different types of PAYG schemes. We derive individually most-preferred PAYG rules (represented by a risk …

Recent theoretical work shows that precautionary savings increase in response to an increase in first-order risk. In … that an immigrant will increase his remittances in response to a first-order risk decrease in future income. Using changes … in the size and generosity of the welfare state as a measure of changes in future income risk, we empirically test the …