We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks …-cycle model of consumption and labor supply. Both permanent wage and hours shocks are important to explain earnings risk, but wage … shocks have greater relevance. Progressive taxation strongly attenuates cross-sectional earnings risk, its life …

Heterogeneous-agent New Keynesian models with sticky nominal wages usually assume that wage-setting unions demand the …, wages and inflation to monetary policy shocks becomes notably less pronounced. This attenuation reflects that hours worked … respond differently across the income distribution. The second model version we consider maintains the assumption that all …

We extend the canonical income process with persistent and transitory risk to shock distributions with left …-skewness and excess kurtosis, to which we refer as higher-order risk. We estimate our extended income process by GMM for household … show that in a standard incomplete-markets life-cycle model, first, higher-order risk has sizable welfare implications …

two spouses and net household income. Furthermore, heterogeneity of preferences and the German tax and benefit system are … taken into account. We extend the neoclassical labor supply model in two directions. First, we allow for endogenous wages … differentials of part-time jobs, the model with endogenous wages predicts lower part-time employment than the standard neoclassical …