One strand of the literature in labor economics, household finance, and macroeconomics has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are disagreements in the empirical literature on this question, with some suggestions...

By supplementing income explicitly through payments or implicitly through taxes collected, income-based taxes and transfers make disposable income less variable. Because disposable income determines consumption, policies that smooth disposable income also create welfare improving consumption...