{'fraction_non_alphanumeric': 0.01668806161745828, 'fraction_numerical': 0.0, 'mean_word_length': 5.190476190476191, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Earnings Dynamics with Heteroskedastic Permanent Shocks

In a standard model of earnings dynamics, we allow earnings risk to depend in an arbitrary way on the unobserved level of past permanent earnings. We show the nonparametric identification of earnings risk, as well as of the densities of the permanent and transitory components of earnings. Applying our model to the Panel Survey of Income Dynamics (PSID), we find that earnings dispersion depends in a nontrivial way on the past level of permanent earnings. During the three recent recessions we analyze, we find that workers with lower pre-recession permanent earnings have higher earnings risk. One important implication of our findings is heterogeneous consumption growth rates in a standard buffer-stock savings model.