analysis uses a tractable consumption-saving model with labor income risk and incomplete markets to relate income dynamics to … of the underlying income process. The empirical application of the framework using data on individual incomes from Mexico … therefore (almost) welfare-neutral. A smaller part of measured income mobility is due to either welfare-reducing income risk or …

consumption-saving model with labor income risk and incomplete markets to relate income dynamics to consumption and welfare, and … income process. The empirical application of our framework using data on individual incomes from Mexico provides striking …) welfare-neutral. A smaller part of measured income mobility is due to either welfare-reducing income risk or welfare …