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Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, Taxes, and Social Security

Author

Listed:
  • Lars Ljungvist

    (Stockholm School of Economics)

  • Thomas Sargent

    (New York University)

Abstract

The same high labor supply elasticity that characterizes a representative family model with indivisible labor and employment lotteries can also emerge without lotteries when self-insuring individuals choose career lengths. Off corners, the more elastic the earnings profile is to accumulated working time, the longer is a worker's career. Negative (positive) unanticipated earnings shocks reduce (increase) the career length of a worker holding positive assets at the time of the shock, while the effects are the opposite for a worker with negative assets. By inducing a worker to retire at an official retirement age, government provided social security can attenuate responses of career lengths to earnings profile slopes, earnings shocks, and taxes. (Copyright: Elsevier)

Suggested Citation

  • Lars Ljungvist & Thomas Sargent, 2014. "Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, Taxes, and Social Security," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(1), pages 1-20, January.
  • Handle: RePEc:red:issued:12-92 DOI: 10.1016/j.red.2013.04.001
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    References listed on IDEAS

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    Cited by:

    1. Sagiri Kitao & Lars Ljungqvist & Thomas Sargent, 2017. "A Life-Cycle Model of Trans-Atlantic Employment Experiences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 320-349, April.
    2. repec:eee:hapoch:v1_457 is not listed on IDEAS

    More about this item

    Keywords

    Career length; indivisble labor; Earnings profile; Earnings shocks; Taxes; Social security; Labor supply elasticity;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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