In this paper, we develop and numerically solve a model of idiosyncratic labour income and idiosyncratic interest rates … to predict the evolution of a wealth distribution over time. Stochastic labour income follows a deterministic growth …

This paper investigates whether risk preferences explain how individuals are sorted into occupations with different … willingness to take risks whose behavioral relevance has been validated in previous work. As a measure of earnings risk, we use … relating earnings risk to the measure of individual risk preference, our evidence shows that individuals with low willingness …

endogenous firing as well as a short-time work decision. In recessions, short-time work reduces the unemployment risk of workers …, which mitigates their precautionary savings motive and aggregate demand falls by less. Using a quantitative model analysis …

-durable consumption. Introducing labor income risk into the model does not necessarily increase the importance of market insurance if the … in a model with non-durable and durable consumption. The stock of the durable is exposed to risk against which households … fluctuations of the predetermined durable stock. Second we solve the model numerically. With deterministic labor income the …

and price of unsecured debt. -- household debt portfolios ; housing ; collateral ; bankruptcy ; commitment ; income risk …

Financial markets provide imperfect insurance of labor income risk. However, workers can partly insure against labor … market risk by commuting to adjacent regions. Since commuters own wage claims to output produced in adjacent regions, the … business cycle in the neighborhood becomes a relevant risk factor at the regional level. In our empirical analysis for US …

In this paper, we empirically assess the causal relationship between trade and individual income risk and study the … from 1976 to 2012. Our estimates suggest substantial heterogeneity in labor income risk across workers in different entry … exports (per worker) are strongly and causally related to income risk: Imports increase risk and exports decrease risk, and …

We study workers' idiosyncratic earnings risk over the life-cycle using a German administrative data set. Positive and … incomplete markets model. Moreover, age-varying risk implies a linear increase in consumption inequality late in working life. …

Microeconomic theory predicts that under certain regularity conditions higher idiosyncratic risk increases the … propensity to insure against independent marketable risks. We apply these predictions to the specific case of labor income risk … and car insurance using data from the UK. The main empirical results are: - higher labor income risk induces a higher …