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Estimating a Life Cycle Model with Unemployment and Human Capital Depreciation

Andreas Pollak

Econometrics from EconWPA

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.

Keywords: Method of Simulated Moments; Unemployment Insurance; Life- Cycle Models; Human Capital (search for similar items in EconPapers)
JEL-codes: C51 D1 E2 J24 J31 J38 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab, nep-ltv and nep-mac
Date: 2005-10-23
Note: Type of Document - pdf; pages: 57
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpem:0510004

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