How does the persistence of earnings change over the life cycle? Do workers at different ages face the same variance of idiosyncratic shocks? This paper proposes a novel specification for residual earnings that allows for an age profile in the persistence and variance of labor income shocks. We...

This paper measures risk in the present value of workers’ remaining lifetime earnings. Building upon a common earnings specification, our estimate combines flexible, heterogeneous forecasts of individuals’ expected earnings growth rates and the variances of potential permanent and temporary...