This paper analyzes the welfare costs of business cycles when workers face uninsurable idiosyncratic labor income risk. In accordance with the previous literature, this paper decomposes labor income risk into an aggregate and an idiosyncratic component, but in contrast to the previous...

This paper uses annual data drawn from the GSOEP to estimate individual earnings risk (labor market risk) in Germany for the period 1983-2012. The econometric specification of the earnings process allows for transitory shocks and permanent shocks to individual earnings. We find that both the...

This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of...

This paper uses annual data drawn from the GSOEP to estimate individual earnings risk (labor market risk) in Germany for the period 1983-2012. The econometric specification of the earnings process allows for transitory shocks and permanent shocks to individual earnings.We find that both the...

This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of...

This paper analyzes the welfare costs of business cycles when workers face uninsurable idiosyncratic labor income risk. In accordance with the previous literature, this paper decomposes labor income risk into an aggregate and an idiosyncratic component, but in contrast to the previous...