Income volatility and portfolio choices

Yongsung Chang, Jay H. Hong, Marios Karabarbounis, Yicheng Wang, Tao Zhang

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


Based on administrative data from Statistics Norway, we find economically significant shifts in households’ financial portfolios around individual structural breaks in labor-income volatility. According to our estimates, when income risk doubles, households reduce their risky share of financial assets by 5 percentage points, thus tempering their overall risk exposure. We show that our estimated risky share response is consistent with a standard portfolio choice model augmented with idiosyncratic, time-varying income volatility.

Original languageEnglish
Pages (from-to)65-90
Number of pages26
JournalReview of Economic Dynamics
Publication statusPublished - 2022 Apr

Bibliographical note

Publisher Copyright:
© 2021 Elsevier Inc.

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


Dive into the research topics of 'Income volatility and portfolio choices'. Together they form a unique fingerprint.

Cite this