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Uncertainty, redistribution, and the labor market since 2007

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  • Casey Mulligan

Abstract

Uncertainty and its composition can affect the demand for social insurance, and thereby the labor market. This paper shows that small to medium-sized increases in uncertainty or risk aversion are enough to recommend an expansion of the safety net that would be broadly similar to the actual safety net expansions in the United States since 2007, which significantly depressed the labor market. Labor market effects of uncertainty through investment and insurance channels are also examined with employer and employee labor wedges measured from 2007 through 2013. Copyright Mulligan; licensee Springer. 2014

Suggested Citation

  • Casey Mulligan, 2014. "Uncertainty, redistribution, and the labor market since 2007," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-16, December.
    • Handle: RePEc:spr:izalpo:v:3:y:2014:i:1:p:1-16:10.1186/2193-9004-3-8
    DOI: 10.1186/2193-9004-3-8
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    References listed on IDEAS

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    1. Jordi Galí & Mark Gertler & J. David López-Salido, 2007. "Markups, Gaps, and the Welfare Costs of Business Fluctuations," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 44-59, November.
    2. Parkin, Michael, 1988. "A method for determining whether parameters in aggregative models are structural," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 29(1), pages 215-252, January.
    3. Casey B. Mulligan, 2002. "A Century of Labor-Leisure Distortions," NBER Working Papers 8774, National Bureau of Economic Research, Inc.
    4. Giuseppe Bertola, 2014. "Labor market policies and European crises," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-11, December.
    5. Nancy Stokey, 2013. "Uncertainty and Investment Options," 2013 Meeting Papers 251, Society for Economic Dynamics.
    6. Sherwin Rosen, 1982. "Authority, Control, and the Distribution of Earnings," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 311-323, Autumn.
    7. Nancy L. Stokey, 2013. "Wait-and-See: Investment Options under Policy Uncertainty," NBER Working Papers 19630, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Casey B. Mulligan, 2020. "Economic Activity and the Value of Medical Innovation during a Pandemic," Working Papers 2020-48, Becker Friedman Institute for Research In Economics.
    2. Ammar Farooq & Adriana Kugler, 2015. "What factors contributed to changes in employment during and after the Great Recession?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-28, December.
    3. Casey B. Mulligan, 2020. "Economic Activity and the Value of Medical Innovation during a Pandemic," NBER Working Papers 27060, National Bureau of Economic Research, Inc.

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