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Occupation-level income shocks and asset returns: their covariance and implications for portfolio choice

This paper develops and applies a simple graphical approach to portfolio selection that accounts for covariance between asset returns and an investor's labor income. Our graphical approach easily handles income shocks that are partly hedgeable, multiple risky assets, multiple risky assets, many periods, and life cycle considerations.
Year of publication:
2013-10-24
Authors: Davis, Steven J. ; Willen, Paul S.
Institutions: Federal Reserve Bank of Boston
Subject: life cycle portfolio choice | risky labor income | graphical approach | occupation-level income shocks
Extent:
application/pdf
Series:
Type of publication: Book / Working Paper
Notes:
The text is part of a series Working Papers Number 13-9 58 pages
Classification: D52 - Incomplete Markets ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; G11 - Portfolio Choice ; J30 - Wages, Compensation, and Labor Costs. General
Source:
Persistent link: https://www.econbiz.de/10010739549
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