-choice decisions to quantify both the amount of income risk that individuals face and the extent to which they have access to informal …-savings model, in which individuals both learn about the nature of their income process and partly insure shocks via informal … income growth rates, (iii) the precision with which individuals know their own income growth rates when they begin their …

response functions of earnings shocks and find important asymmetries: Positive shocks to high-income individuals are quite … transitory, whereas negative shocks are very persistent; the opposite is true for low-income individuals. Finally, we use these …