Unemployment Dynamics and Social Security
AbstractThe goal of this paper is to determine the effects of different social security regimes on job search. A less generous pension system induces higher savings across the life cycle and makes agents wealthier and thus more reluctant to accept low wage offers. On the other hand, as the social security system provides insurance against labor shocks, such as layoffs and future unemployment spells, a less generous system induces agents to accept bad job offers to save for retirement. To determine the strength of each effect, we develop a life-cycle overlapping generations model with job search, savings and a fully funded social security system. After obtaining the parameters that match the predicted moments to the observed path of employment states, wages, and assets, we compute the effects of alternative social security regimes in the U.S. economy.
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 170.
Date of creation: 11 Aug 2004
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Job search; social security; savings; asset accumulation liquidity constraints; retirement.;
Other versions of this item:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-16 (All new papers)
- NEP-DGE-2004-08-16 (Dynamic General Equilibrium)
- NEP-PBE-2004-08-16 (Public Economics)
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