This paper aims to fill the gaps in the analysis of risk‐sharing channels at the microlevel, both within and across … to quantify in a unified and consistent framework several risk‐sharing mechanisms that so far have been documented … both 2008-2010 and 2010-2012 spells. The most important smoothing mechanisms turn out to be self‐insurance through savings …

Households face earnings risk which is non-normal and varies by age and over the income distribution. We show that … assets. Because households are subject to more background risk than previously considered, the estimated model implies a … substantially lower coefficient of risk aversion. We also find renewed support for rule-of-thumb investment strategies under the …

Private consumption demand falls in response to increased unemployment risk during a recession, as households increase … unemployment risk is more important than realized unemployment shocks in accounting for durable expenditure dynamics during … recessions, while the opposite is true for nondurables. The importance of anticipation of future unemployment risk also means …