The Reservation Wage under CARA and Limited Borrowing
AbstractA continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 10291.
Date of creation: 15 Mar 2009
Date of revision:
labor income risk; wealth-dependent reservation wage; borrowing limit;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- 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-2009-05-16 (All new papers)
- NEP-DGE-2009-05-16 (Dynamic General Equilibrium)
- NEP-LAB-2009-05-16 (Labour Economics)
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- S. Nuray Akin & Brennan Platt, 2012.
"Running Out of Time: Limited Unemployment Benefits and Reservation Wages,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 149-170, April.
- S. Nuray Akin & Brennan Platt, 2011. "Code and data files for "Running Out of Time: Limited Unemployment Benefits and Reservation Wages"," Computer Codes 10-201, Review of Economic Dynamics.
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