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Asset Accumulation and Short Term Employment

  • Martin Browning

    (University of Copenhagen)

  • Thomas F. Crossley

    (McMaster University)

  • Eric F. Smith

    (University of Essex)

If access to credit is limited (especially when young or unemployed) but "bad" jobs are easy to come by, then job seekers might use short term employment in undesirable jobs as a way to finance consumption during subsequent unemployed search for a "good" job. In this paper we explore this idea by building a theoretical model of job search by risk averse, debt constrained agents. In this model we characterize analytically conditions under which voluntary planned separations occur as agents cycle between accumulating assets in short term employment and unemployed search for more desirable employment. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2006.12.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 10 (2007)
Issue (Month): 3 (July)
Pages: 400-423

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Handle: RePEc:red:issued:05-38
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  17. Hans Bloemen & Elena Stancanelli, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Sciences Po publications info:hdl:2441/9704, Sciences Po.
  18. Yann Algan & Arnaud Cheron & Jean-Olivier Hairault & Francois Langot, 2003. "Wealth Effect on Labor Market Transitions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 156-178, January.
  19. James Costain, 1997. "Unemployment insurance with endogenous search intensity and precautionary saving," Economics Working Papers 243, Department of Economics and Business, Universitat Pompeu Fabra.
  20. 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.
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