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Job Ladder and Wealth Dynamics in General Equilibrium

Author

Listed:
  • Kaas, Leo

    (European University Institute)

  • Lalé, Etienne

    (York University, Canada)

  • Siassi, Nawid

    (University of Konstanz)

Abstract

This paper develops a macroeconomic model that combines an incomplete-markets overlapping-generations economy with a job ladder featuring sequential wage bargaining, endogenous search effort of employed and non-employed workers, and differences in match quality. The calibrated model offers a good fit to the empirical age profiles of search activity, job-finding rates, wages and savings, so that we use the model to examine the role of age and wealth for worker flows and for the consequences of job loss. We further analyze the impact of unemployment insurance and progressive taxation for labor market dynamics and aggregate economic activity via capital, employment and labor efficiency channels. Lower unemployment benefits or a less progressive tax schedule bring about welfare losses for a newborn worker household.

Suggested Citation

  • Kaas, Leo & Lalé, Etienne & Siassi, Nawid, 2023. "Job Ladder and Wealth Dynamics in General Equilibrium," IZA Discussion Papers 16664, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp16664
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    Cited by:

    1. Créchet, Jonathan & Lalé, Etienne & Tarasonis, Linas, 2026. "Life-cycle worker flows and cross-country differences in aggregate employment," Journal of Monetary Economics, Elsevier, vol. 159(C).
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    3. Bick, Alexander & Dias Da Silva, António & Weißler, Marco, 2026. "On-the-job search in Europe and the U.S.: precautionary vs. job ladder motives," Working Paper Series 3267, European Central Bank.

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    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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