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 …

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 …

income risk matters substantially for consumption …We measure the extent of consumption insurance to income shocks accounting for high-order moments of the income … income shocks. Using PSID data, we estimate an asymmetric pass-through of bad versus good permanent shocks – 17% of a 3σ …

Using detailed micro-data, this paper documents that households with lower income risk (and higher income levels … designed to account for the empirically observed negative correlation between income levels and income risk. This interaction … labor income risk. Otherwise, the effects of income risk are masked by wealth effects. In neither case, the MPC depends on …

We investigate whether US households possess advance information about their future income and what this means for … requires only panel data on consumption and income. Using the Panel Study of Income Dynamics, we find-in contrast to the … incomplete markets model and find that advance information reduces households' income forecast errors by 15%. Our estimation …

theory suggests that with increasing labor income risk, the reluctance of households to hold stocks increases. We propose to … measure income risk as the observed variation of household income over a five year period. We find that indeed higher income … risk reduces the propensity to invest in stocks. However, when controlling for household heterogeneity as well as …

This review article examines the role of labor income risk in determining the value of a person's human capital. We … framework, we highlight the implications of different assumptions about the correlation between market returns and labor income … to assess the value and risk of pension promises. Finally, we discuss how to enrich the environment with heterogeneity in …

income risk affects equity ownership turnover. A portfolio choice model with an income process extracted from survey data … enter or exit from their non-retirement investment accounts biennially. Cross-sectional and time-series tests indicate that … shows that idiosyncratic income shocks are more important for dynamic equity ownership decisions than aggregate stock market …