@TechReport{iza:izadps:dp10925,
            	author={Sanchez, Manuel and Wellschmied, Felix},
            	title={Modeling Life-Cycle Earnings Risk with Positive and Negative Shocks},
            	year={2017},
	month={Jul},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={10925},
            	url={https://www.iza.org/publications/dp10925},
	abstract={We study workers' idiosyncratic earnings risk over the life-cycle using a German administrative data set. Positive and negative earnings shocks both contain a highly persistent component. The variance and average size of positive persistent shocks is decreasing over the life-cycle. The (absolute) size of negative persistent shocks is increasing. The probability to experience either of these shocks is U-shaped in age; during prime-age it is around 35 percent. Negative transitory shocks are relatively larger and more dispersed than positive transitory shocks. 
Their size and variance are increasing over the life-cycle. Large persistent positive shocks early in life generate large wealth holdings for the top one percent of workers in an incomplete markets model. Moreover, age-varying risk implies a linear increase in consumption inequality late in working life.},
	keywords={life-cycle;earnings risk;wealth dispersion},
            }