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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

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 82.

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Date of creation: 2004
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Handle: RePEc:red:sed004:82

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Web page: http://www.EconomicDynamics.org/society.htm
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Keywords: wage risk; unemployment risk; precautionary savings;

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