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Wage risk and employment risk over the life-cycle

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  • Luigi Pistaferri
  • Hamish Low
  • Costas Meghir

Abstract

We define the distinction between productivity and employment risk and estimate the components of risk using wage and mobility data from the Panel Study of Income Dynamics. We then calibrate a model of intertemporal consumption and labor supply and study the effect of the two sources of risk on precautionary saving and labor supply. Finally, we measure the relative welfare costs of employment and productivity risk and the insurance contents of simple government programs

Suggested Citation

  • Luigi Pistaferri & Hamish Low & Costas Meghir, 2004. "Wage risk and employment risk over the life-cycle," 2004 Meeting Papers 82, Society for Economic Dynamics.
    • Handle: RePEc:red:sed004:82
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    More about this item

    Keywords

    wage risk; unemployment risk; precautionary savings;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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