Labour Income Risk over the Life Cycle: Measurement and Implications

Population ageing induced an increased role of pension funds in granting retirement income, due to the expected reduction in social security benefits. One unresolved challenge is the assessment of labor income risk, as this is the background risk to be hedged with appropriate savings and investment choices by pension fund members. This issue lies at the heart of our project, which is composed of three closely related parts and will result in three working papers. I. Industry-based wage risk and life-cycle portfolio profiles. II. Career opportunities and life-cycle portfolio profiles. III. Unemployment risk over the life cycle.