The global economy has been in an interesting position the last year. Many economies of all types, sizes and origins are in fear of, or actually in, recession. The terms ‘credit-crunch' and ‘sub-prime' are common parlance referred to on a daily basis by newspapers and common laity. This is a...

This paper investigates how households smooth consumption against idiosyncratic wage shocks in recessions and expansions. Labour market uncertainty amplifies during recessions, captured through the cross-sectional dispersion of wages. I focus on the relative contribution of two insurance...