We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear …

households less than half of human capital risk is insured and the welfare losses due to the lack of insurance range from 3 … populated by a large number of long-lived, risk-averse households with homothetic preferences who can invest in risk …-free physical capital and risky human capital. Households have access to a complete set of credit and insurance contracts, but their …

To test whether transfers sent and received by regional migrants serve an insurance role, this paper estimates the … rainfall shocks in rural Nicaragua, I find that migrants aged 15-21 years provide unilateral insurance to their origin … household. Distinguishing by destination and economic activity I show that the level of insurance increases when migrants and …

households with children are under-insured against the risk that an adult member of the household dies. We develop a tractable … macroeconomic model with human capital risk, age-dependent returns to human capital investment, and endogenous borrowing constraints … due to the limited pledgeability of human capital. We show analytically that, consistent with the life insurance data, in …

and car insurance using data from the UK. The main empirical results are: - higher labor income risk induces a higher … demand for car insurance. - the effects of increases in labor income risk after 1979 seem to be more than offset by a more …Microeconomic theory predicts that under certain regularity conditions higher idiosyncratic risk increases the …

drive the demand for risk reduction, and some to alter both. Our findings suggest that 30 percent of all insurance payments …We run a novel experiment to explore the relationship between the perception of real-life risks and the demand for risk … life. For each risk, subjects can pay premiums in order to reduce the likelihood of total bankruptcy. Our results show a …

-level, idiosyncratic risk implies that distinct risk-sharing institutions - even those providing the same level of insurance - can lead to …We analyze the role of risk-sharing institutions in transitions to modern economies. Transitions requires individual …-level risk-taking in pursuing productivity-enhancing activities including using and developing new knowledge. Individual …

farm and non-farm households within counties and over time. The results suggest that increased rainfall risk does indeed … shows that this effect is reduced if risk management devices such as irrigation systems, formal financial institutions or … machinery emerge. The findings contribute to the understanding of the demographic transition in the US and in risk-prone areas …

We estimate the changes in US male labor market risk over the last three decades in a model of endogenous labor supply … a life-cycle model with search frictions, we show that the estimated changes in risk can account for 85 percent of the … increase in within group wage inequality. The welfare costs of rising risk are small. …

risk. Progressive taxation of annual earnings provides little insurance against lifetime earnings risk. The lifetime … lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against … lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and -transfer system …