Portfolio Choices Over the Life-Cycle and the Cyclical Skewness of Labor Income Shocks

2016 ◽  
Author(s):  
Sylvain Catherine
Keyword(s):  
Life Cycle ◽  
Labor Income ◽  
Income Shocks ◽  
Portfolio Choices

scholarly journals Learning Your Earning: Are Labor Income Shocks Really Very Persistent?

2007 ◽  
Vol 97 (3) ◽  
pp. 687-712 ◽  
Author(s):  
Fatih Guvenen
Keyword(s):  
Life Cycle ◽  
Current Literature ◽  
Previous Literature ◽  
Labor Income ◽  
Income Shocks ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Consumption Data ◽  
Hip Process

The current literature offers two views on the nature of the labor income process. According to the first view, individuals are subject to very persistent income shocks while facing similar life-cycle income profiles (the RIP process, Thomas MaCurdy 1982). According to the alternative, individuals are subject to shocks with modest persistence while facing individual-specific profiles (the HIP process, Lee A. Lillard and Yoram A. Weiss 1979). In this paper we study the restrictions imposed by these two processes on consumption data—in the context of a life-cycle model—to distinguish between the two views. We find that the life-cycle model with a HIP process, which has not been studied in the previous literature, is consistent with several features of consumption data, whereas the model with a RIP process is consistent with some, but not with others. We conclude that the HIP model could be a credible contender to—and along some dimensions, a more coherent alternative than—the RIP model. (JEL D83, D91, E21, J31)

scholarly journals Taxing Capital? Not a Bad Idea After All!

2009 ◽  
Vol 99 (1) ◽  
pp. 25-48 ◽  
Author(s):  
Juan Carlos Conesa ◽  
Sagiri Kitao ◽  
Dirk Krueger
Keyword(s):  
Income Tax ◽  
Labor Income ◽  
Income Shocks ◽  
Capital Income ◽  
Overlapping Generations Model ◽  
Cycle Structure ◽  
Tax Rate ◽  
Average Household Income ◽  
Optimal Capital

We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is significantly positive at 36 percent. The optimal progressive labor income tax is, roughly, a flat tax of 23 percent with a deduction of $7,200 (relative to average household income of $42,000). The high optimal capital income tax is mainly driven by the life-cycle structure of the model, whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system. (JEL E13, H21, H24, H25)

scholarly journals Child Labor, Income Shocks, and Access to Credit

2003 ◽  
Author(s):  
Kathleen Beegle ◽  
Rajeev H. Dehejia ◽  
Roberta Gatti
Keyword(s):  
Child Labor ◽  
Labor Income ◽  
Income Shocks ◽  
Access To Credit

scholarly journals Social Protection and Informality in Latin America during the COVID-19 Pandemic

2020 ◽  
Author(s):  
Matías Busso ◽  
Juanita Camacho ◽  
Julián Messina ◽  
Guadalupe Montenegro
Keyword(s):  
Latin American ◽  
Social Protection ◽  
Ad Hoc ◽  
Labor Income ◽  
Income Shocks ◽  
Assistance Programs ◽  
Informal Workers ◽  
Inability To Work ◽  
Social Protection Systems ◽  
Income Assistance

Latin American governments swiftly implemented income assistance programs to sustain families' livelihoods during COVID-19 stay-at-home orders. This paper analyzes the potential coverage and generosity of these measures and assesses the suitability of current safety nets to deal with unexpected negative income shocks in 10 Latin American countries. The expansion of pre-existing programs (most notably conditional cash transfers and non-contributory pensions) during the COVID-19 crisis was generally insufficient to compensate for the inability to work among the poorest segments of the population. When COVID-19 ad hoc programs are analyzed, the coverage and replacement rates of regular labor income among households in the first quintile of the country's labor income distribution increase substantially. Yet, these programs present substantial coverage challenges among families composed of fundamentally informal workers who are non-poor, but are at a high risk of poverty. These results highlight the limitations of the fragmented nature of social protection systems in the region.

scholarly journals Learning Your Earning: Are Labor Income Shocks Really Very Persistent?

2006 ◽  
Author(s):  
Fatih Guvenen
Keyword(s):  
Labor Income ◽  
Income Shocks

scholarly journals On the Persistence of Income Shocks Over the Life Cycle: Evidence and Implications

2009 ◽  
Author(s):  
Yasar Fatih Karahan ◽  
Serdar Ozkan
Keyword(s):  
Life Cycle ◽  
Income Shocks

ACCOUNTING FOR LIFE-CYCLE WEALTH ACCUMULATION: THE ROLE OF HOUSING INSTITUTION

2011 ◽  
Vol 16 (4) ◽  
pp. 493-517 ◽  
Author(s):  
Sang-Wook (Stanley) Cho
Keyword(s):  
Life Cycle ◽  
The United States ◽  
Mortgage Market ◽  
Wealth Accumulation ◽  
Labor Income ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Policy Experiments ◽  
Cross Country

This paper constructs a quantitative general equilibrium life-cycle model with uninsurable labor income to account for the differences in wealth accumulation and homeownership between Korea and the United States. The model incorporates different structures in the housing market in the two countries, namely, the mortgage market and the rental arrangements. The results from the calibrated model quantitatively explain some empirical findings in the aggregate and life-cycle profiles of wealth and homeownership. Quantitative policy experiments show that the mortgage market alone can account for more than 40% of the differences in the aggregate homeownership ratios. When coupled with the rental arrangements, both institutions can account for approximately 52% of the differences in the cross-country homeownership ratios.

scholarly journals Life Cycle Impacts of the Financial Crisis on Optimal Consumption—Portfolio Choices and Labor Supply

2012 ◽  
pp. 120-150 ◽  
Author(s):  
Jingjing Chai ◽  
Raimond Maurer ◽  
Olivia S. Mitchell ◽  
Ralph Rogalla
Keyword(s):  
Life Cycle ◽  
Financial Crisis ◽  
Labor Supply ◽  
Optimal Consumption ◽  
Portfolio Choices
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