Cyclical Labor Income Risk

Lifecycle Investment Decisions and Labor Income Risk

The optimal proportion of financial wealth placed in stocks versus risk-free bonds changes over an investor’s life and is very sensitive to the long-run correlation between stock returns and labor income. If this correlation is assumed to be high, then the optimal proportion of stock is humpshaped and approximately zero for young agents, in contrast to the claims of financial advisers and most ...

Housing Choices and Labor Income Risk

I show that individuals whose unemployment risk tends to increase more when local home prices fall optimally invest less in owner-occupied housing. Using a unique, Swedish register-based database, I …nd that a one standard deviation increase in the covariance between individually estimated unemployment risks and local home prices implies an average increase in the value of households’ investmen...

Offshoring and labor income risk : An empirical

This paper analyses how increased offshoring impacts on labor income risk. It is therefore distinct from a large number of studies explaining the level effects of globalization on the labor market in that it takes a look at effects on the variability of incomes. It provides an assessment that directly connects labor income risk and offshoring trends in a panel setting at the industry level. Imp...

Cyclical Movements along the Labor Supply Function

Labor Productivity: Structural Change and Cyclical Dynamics

A longstanding puzzle of empirical economics is that average labor productivity declines during recessions and increases during booms. This paper provides a framework to assess the empirical importance of competing hypotheses for explaining the observed procyclicality. For each competing hypothesis we derive the implications for cyclical productivity conditional on expectations of future demand...