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Estimating a Life Cycle Model with Unemployment and Human Capital Depreciation

Author

Listed:
  • Andreas Pollak

    (University of Freiburg)

Abstract

I 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.

Suggested Citation

  • Andreas Pollak, 2005. "Estimating a Life Cycle Model with Unemployment and Human Capital Depreciation," Econometrics 0510004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpem:0510004
    Note: Type of Document - pdf; pages: 57
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/em/papers/0510/0510004.pdf
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    Cited by:

    1. Pollak, Andreas, 2007. "Optimal unemployment insurance with heterogeneous agents," European Economic Review, Elsevier, vol. 51(8), pages 2029-2053, November.

    More about this item

    Keywords

    Method of Simulated Moments; Unemployment Insurance; Life- Cycle Models; Human Capital;
    All these keywords.

    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

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