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Asset Accumulation and Short Term Employment

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Author Info
Martin Browning (Institute of Economics, University of Copenhagen)
Thomas F. Crossley (McMaster University)
Eric Smith (University of Essex)

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Abstract

This paper investigates the search and consumption behavior of workers as they move between readily available low wage employment and uncertain search for a high wage job. Analytic results derived from our model include: (1) voluntary planned quits occur in a cyclical pattern, (2) consumption while searching falls over time until either a good job is found or assets run out and the worker accepts a low wage job, (3) consumption during low wage employment is less than earnings, and (4) the durations of job search and employment as well as the pattern of consumption are related to turnover costs and wages. Empirical evidence from the 1995 Canadian out of Employment Panel (COEP) broadly supports these relationships. In these data, there exists a high incidence of displaced workers taking temporary low wage jobs. Examining the income, consumption and savings patterns of workers in different regimes, we fiind that these accord with the theoretical predictions.

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Publisher Info
Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2003-02.

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Length: 19 pages
Date of creation: Feb 2003
Date of revision:
Handle: RePEc:kud:kuieca:2003_02

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Related research
Keywords: unemployment; search; consumption; assets;

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Find related papers by JEL classification:
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

This item is featured on the following reading lists:

  1. Canadian Macro Study Group
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Boheim, Rene & Taylor, Mark P., 2002. "The search for success: do the unemployed find stable employment?," Labour Economics, Elsevier, vol. 9(6), pages 717-735, December. [Downloadable!] (restricted)
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  2. Stancanelli, Elena G F, 1999. " Do the Rich Stay Unemployed Longer? An Empirical Study for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 295-314, August. [Downloadable!] (restricted)
    Other versions:
  3. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October. [Downloadable!] (restricted)
  4. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September. [Downloadable!] (restricted)
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  5. Bloemen, Hans G & Stancanelli, Elena G F, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 400-439, April. [Downloadable!] (restricted)
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  6. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Martin Browning & Thomas F. Crossley, 2001. "The Life-Cycle Model of Consumption and Saving," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 3-22, Summer. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wolff, Joachim & Nivorozhkin, Anton, 2008. "Start me up: The effectiveness of a self-employment programme for needy unemployed people in Germany," IAB Discussion Paper 200820, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  2. Tricia Gladden & Michelle Alexopoulos, 2004. "The Effects of Wealth, and Unemployment Benefits on Search Behavior and Labor Market Transitions," Econometric Society 2004 North American Summer Meetings 517, Econometric Society. [Downloadable!]
  3. Bulent Guler & Fatih Guvenen & Giovanni L. Violante, 2009. "Joint-Search Theory: New Opportunities and New Frictions," NBER Working Papers 15011, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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