We discuss long-run growth in an economy which is subject to aggregate productivity shocks affecting all factors of production. We demonstrate that the presence of labor income risk unambiguously is an important determinant of long-run expected growth. The issue of dynamic inefficiency of the...

This paper showed that the drop of propensity to consume in Japan during the lost decade is attributable to increase of income risks, mainly due to rises in unenployment rate/ To asses the impacts of income risks, we used the buffer stock saving model and a numerical method. The buffer stock...

Studies dealing with productivity in female (FHH) and male headed households (MHH) find that FHH appear to be either less, equally, or more productive compared to MHH. Lower productivity of FHH is often explained by insecure access to land, while the findings of higher productivity largely...

This paper studies empirically the relationship between trade policy and individual income risk and uses the empirical estimates of this relationship to asses the welfare costs of changes in trade policy. The empirical analysis proceeds in two steps. First, longitudinal data on income of Mexican...

We study the aggregate effects of a social security reform in a large overlapping generations model where markets are incomplete and households face uninsurable idiosyncratic income shocks. We depart from the previous literature by assuming that, because of lack of commitment in the credit...

Former theoretical and empirical studies find that precautionary savings are reduced inthe presence of social security systems. The saving motive, however, does not change:individuals respond to increasing income risk by increasing their savings. Although thisstill holds for common tax and...

Rural households in developing economies frequently use precautionary saving to cope with income risk. Such prudent behavior can be strengthened in transition economies where more risks are typically faced by households during and after reforms. This paper uses a rich panel of rural households...

There is no robust empirical support for the effect of financial incentives on the decision to work in self-employment rather than as a wage earner. In the literature, this is seen as a puzzle. We offer a focus on the opportunity cost, i.e. the wages given up as an employee. Information on...