Modeling life-cycle earnings risk with positive and negative shocks

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Show simple item record Sánchez, Manuel Wellschmied, Félix 2022-03-29T16:23:10Z 2022-07-01T23:00:06Z 2020-07-01
dc.identifier.bibliographicCitation Sanchez, M., & Wellschmied, F. (2020). Modeling life-cycle earnings risk with positive and negative shocks. Review of Economic Dynamics, 37, pp. 103-126.
dc.identifier.issn 1094-2025
dc.description.abstract We estimate explicit age-varying distributions of idiosyncratic persistent and transitory earnings shocks over workers' life-cycles using a German administrative data set. Large positive shocks, both transitory and persistent, are characteristic for the first eight years of the working life. After the age of 50, large negative shocks become a major source of earnings risk. Between the ages of 30 and 50, most shocks are small and transitory. Large persistent positive shocks that occur early in the working life help to rationalize large wealth and consumption shares of the top one percent in an incomplete markets model.
dc.description.sponsorship This paper uses the Sample of Integrated Labour Market Biographies-Regional File 1975-2010, SIAB R 7510. The data was provided via the Cornell Restricted Access Data Center, previous authorization of the Research Data Center of the German Federal Employment Agency at the Institute for Employment Research, under the project 'Labour Income Profiles are not heterogeneous: a European test'. Felix Wellschmied gratefully acknowledges support from the Spanish Ministry of Economics through research grants ECO2014-56384-P, MDM 2014-0431, and Comunidad de Madrid MadEco-CM (S2015/HUM-3444).
dc.language.iso eng
dc.publisher Elsevier
dc.rights ©2020 Elsevier
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.subject.other Life-cycle
dc.subject.other Earnings risk
dc.subject.other Wealth dispersion
dc.subject.other Consumption inequality
dc.title Modeling life-cycle earnings risk with positive and negative shocks
dc.type article
dc.rights.accessRights openAccess
dc.relation.projectID Gobierno de España. ECO2014-56384-P
dc.relation.projectID Gobierno de España. MDM-2014-0431
dc.relation.projectID Comunidad de Madrid. S2015/HUM-3444
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 103
dc.identifier.publicationlastpage 126
dc.identifier.publicationtitle REVIEW OF ECONOMIC DYNAMICS
dc.identifier.publicationvolume 37
dc.identifier.uxxi AR/0000026582
dc.contributor.funder Ministerio de Economía y Competitividad (España)
dc.contributor.funder Comunidad de Madrid
dc.affiliation.dpto UC3M. Departamento de Economía
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