Unlike prototype immigration countries, Germany has attracted a large number of southern Europeans as temporary guestworkers in the 60s and 70s. Nevertheless, many of them have stayed on and intend to remain in Germany. I investigate whether these workers have become successfully integrated into...

In this paper I study a model of life-cycle consumption in which individuals react optimally to their own income process but ignore economy wide information. Since individual income is less persistent than aggregate income consumers will react too little to aggregate income variation. Aggregate...