Households can rely on private savings or on public unemployment insurance to hedge against the risk of becoming … risk on households’ equity holdings. When incorporating long-term unemployment, the US-equity share drops. This negative … significantly alter portfolio decisions. We show that different responses of portfolios to unemployment risk can be attributed to …

(2005). We extend it by unemployment risk using Markov chains to model the transition between different employment states … systems as those established in the EU are able to offset the negative impact of unemployment risk on the portfolio …

This paper empirically investigates the effects of changes in the interest rate as well as transitory income … significant effects of precautionary savings on the consumption-savings decision. As a result of a doubling of transitory income …

We study the trend in household income uncertainty using a novel approach that measures income uncertainty as the … variance of forecast errors at each future horizon separately without imposing parametric restrictions on the underlying income … shocks. We find that household income uncertainty has risen significantly and persistently since the early 1970s. For example …

facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium feedback of … optimal aggregate saving rate is independent of income risk. The optimal time-invariant tax on capital is increasing in income … that the optimal steady state saving rate is increasing in income risk if and only if the intertemporal elasticity of …

uninsured capital income risk, and suffer from an information-processing capacity constraint. For given attention devoted to … capital income risk, we solve for the optimal consumption-saving choices and show that the expected welfare is increasing with … households would pay more attention to capital income risk if they have (i) lower initial wealth endowment, (ii) lower marginal …

default risk, which results in significant decreases in pension benefits. In order to address the challenge of annuity income … decision to increase annuities in the face of annuity income uncertainty is analogous to deciding when to buy the asset in the …

We develop a retirement model with long-run income risk in which the wealth threshold for retirement is shown to be a … function of the extent of the long-run income risk. By devising a new numerical algorithm, we solve the two …

In this paper, we empirically assess the causal relationship between trade and individual income risk and study the … from 1976 to 2012. Our estimates suggest substantial heterogeneity in labor income risk across workers in different entry … exports (per worker) are strongly and causally related to income risk: Imports increase risk and exports decrease risk, and …