Labor Supply and Saving under Uncertainty

Martin Floden ()

No 597, Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: This paper examines how variations in labor supply can be used to self-insure against wage uncertainty, and the impact of such self-insurance on precautionary saving. The analytical framework is a two-period model with saving and labor-supply decisions where preferences are consistent with balanced growth. The main findings are that (i) labor-supply flexibility raises precautionary saving when future wages are uncertain, and (ii) uncertainty about future wages raises current labor supply and reduces future labor supply.

Keywords: precautionary saving; prudence; labor supply (search for similar items in EconPapers)
JEL-codes: D81 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Date: 2005-04-22
View list of references View citations in EconPapers

Published in Economic Journal, 2006, pages 721-737.

Downloads: (external link)
http://swopec.hhs.se/hastef/papers/hastef0597.pdf (application/pdf)

Related works:
Journal Article: Labour Supply and Saving Under Uncertainty (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:hastef:0597

Access Statistics for this paper

More papers in Working Paper Series in Economics and Finance from Stockholm School of Economics
Address: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Contact information at EDIRC.
Series data maintained by Helena Lundin ().