Year: 2010
Type: article
Abstract: We specify a life-cycle model of consumption, labor supply and job mobility in an economy with search frictions. We distinguish different sources of risk, including shocks to productivity, job arrival, and job destruction. Allowing for job mobility has a large effect on the estimate of productivity risk. Increases in the latter impose a considerable welfare loss. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of programs such as Food Stamps, partially insuring productivity risk, is greater than the value of unemployment insurance which provides (partial) insurance against employment risk. (JEL D91, J22, J31, J61, J64, J65)
Source: American Economic Review
Authors: Hamish Low, Costas Meghir, Luigi Pistaferri
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Awards: G134331554, G2102674045, G7887805520
OpenAlex ID: W3122984530