13One would hope that the institutional features of individual countries, such as the progressiveness of income taxes and the
generosity of unemployment benefits would be more clearly reflected in the estimates of variances of shocks. Table 1 does not
point to the fact that, e.g., these variance would be substantially smaller in countries such as Germany. This may be due to
measurement and sampling errors.
Blundell, Graber, and Mogstad (2013) document in high-quality administrative data from Norway that the variances of shocks to
market (pretax) income clearly exceed those of disposable (after-tax) income. (The Norwegian data also reflect the presence
transitory income shocks (as opposed to just measurement error).) See also Rostam-Afschar and Yao (2013) on the effects of the
tax and transfer system on precautionary saving.