Estimating a Life Cycle Model with Unemployment and Human Capital Depreciation
AbstractI estimate a life cycle model of consumption choice with unemployment risk. Employed individuals face the risk of losing their job. Unemployed agents receive job random offers of different quality, which they can accept or reject. Following the loss of a job and during unemployment, an agent’s productivity declines. Using micro data, I estimate the structural model for Germany, the UK, and the US following the method of simulated moments approach of Duffie and Singleton. The estimated model is used to perform policy simulations that highlight the relationship between the unemployment insurance scheme and the unemployment rates of different age groups.
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Bibliographic InfoPaper provided by EconWPA in its series Econometrics with number 0510004.
Length: 57 pages
Date of creation: 23 Oct 2005
Date of revision:
Note: Type of Document - pdf; pages: 57
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Method of Simulated Moments; Unemployment Insurance; Life- Cycle Models; Human Capital;
Find related papers by JEL classification:
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- D1 - Microeconomics - - Household Behavior
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- 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-2005-10-29 (All new papers)
- NEP-DGE-2005-10-29 (Dynamic General Equilibrium)
- NEP-LAB-2005-10-29 (Labour Economics)
- NEP-LTV-2005-10-29 (Unemployment, Inequality & Poverty)
- NEP-MAC-2005-10-29 (Macroeconomics)
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- Pollak, Andreas, 2007. "Optimal unemployment insurance with heterogeneous agents," European Economic Review, Elsevier, vol. 51(8), pages 2029-2053, November.
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