We develop a new approach to the decomposition of income risk within a nonstationary model of intertemporal choice. The … approach allows for changes in income risk over the life-cycle and with the business cycle. It requires only repeated cross … decomposing income risk. The approach is used to investigate the changes in income risk in Britain across the inequality growth …

consumption-saving model with labor income risk and incomplete markets to relate income dynamics to consumption and welfare, and …) welfare-neutral. A smaller part of measured income mobility is due to either welfare-reducing income risk or welfare …This paper develops a framework for the quantitative analysis of individual income dynamics, mobility and welfare …

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

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 …

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 …

In this paper we study the importance of marriage for interstate risk sharing. We find that US states in which married … just improve the allocation of risk at the individual level, but also have implications for the allocation of risk at the … more aggregated state-level. Quantitatively, the impact of marriage on interstate risk sharing varies over divorce regimes …

We analyze the impact of an increase in the risk of divorce on the saving behaviour of married couples. From a … experience a significant increase in the expected risk of divorce (such as very religious families, or single individuals). Our … results suggest that the increase in the risk of divorce brought about by the law was followed by an increase in the …

Analysing the US Panel Study of Income Dynamics, we present a new empirical method to investigate the extent to which … households reduce their financial risk exposure when confronted with background risk. Our novel modelling approach – termed a … risk, and is unique in recovering for, any given risky asset class, the shares that are reallocated to a safer asset …

uncertainty of remittance income inflows affects the accumulation of human, physical and financial assets of Mexican households … income hypothesis and theories of precautionary saving, a one standard deviation increase in the uncertainty of remittance … income raises the likelihood of household spending on asset accumulation by about 2 percentage points while raising the share …