Essays in Idiosyncratic Income Risk

Abstract

The three chapters in this dissertation constitute an investigation of the determinants of idiosyncratic income risk faced by individuals and households over their lives and over time, as well as the consequences for individual behavior and welfare. Chapter 1 concentrates on the business-cycle variation in higher-order income risk and the extent to which such risk can be smoothed within households or with government social insurance policies. Chapter 2 studies the role of labor market institutions and employment protection in shaping individuals' exposure to earnings uncertainty over their lives. Chapter 3 measures the response of household consumption to large and unexpected earnings fluctuations that neither labor market institutions nor government policy can insure away.