This dissertation studies the importance of shocks in understanding economic outcomes, both at the aggregate and at the individual levels. The research in this document is separated into chapters that deal with somewhat dissimilar questions which are linked by the necessity to acknowledge and understand how unforeseeable shocks determine how agents make economic decisions. These shocks or innovations are a potential explanation for why, often similar economic actors face very different paths. In Chapter 2, the interest lays in the determinants of different life-cycle fertility outcomes across educational groups. The chapter presents a model where individuals deal with idiosyncratic shocks in the form of innovations to their market wages and to the efficacy with which they can control fertility outcomes. The model is estimated using data for the US and tested to see how it fares replicating facts of aggregate fertility under different counterfactual scenarios. Chapter 3 (co-authored with Jose-Victor Rios-Rull), studies the cyclical behavior of the aggregate labor's share in total income, taking as a starting point models of business cycles driven by economy-wide technological shocks. The chapter looks at the co-movement of labor share and technological innovations in post war US history and assesses how well existing models can explain the facts.