Job Ladder and Wealth Dynamics in General Equilibrium

Leo Kaas, Lalé, Étienne and Nawid Siassi
Authors registered in the RePEc Author Service: Etienne Lalé

No 18706, CEPR Discussion Papers from Centre for Economic Policy Research

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. With these ingredients our model provides a joint microfoundation for the three main inputs in aggregate production: capital, employment and labor efficiency. The calibrated model offers a good fit to the empirical age profiles of search activity, job-finding rates, wages and savings. We use the model to analyze the impact of tax and transfer policies for labor market dynamics and aggregate economic activity via capital, employment and labor efficiency channels. Lower unemployment benefits and a less progressive tax schedule bring about welfare losses for a newborn worker which are mainly driven by higher consumption risk and costlier search effort; both policies have differential effects along the age, income and wealth dimensions.

Keywords: Search and matching; Job-to-job transitions; Incomplete markets; Overlapping generations; Wealth accumulation (search for similar items in EconPapers)
JEL-codes: E21 E24 H24 J64 J65 (search for similar items in EconPapers)
Date: 2023-12
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Related works:
Journal Article: Job Ladder and Wealth Dynamics in General Equilibrium (2026)
Working Paper: Job Ladder and Wealth Dynamics in General Equilibrium (2023)
Working Paper: Job Ladder and Wealth Dynamics in General Equilibrium (2023)
Working Paper: Job Ladder and Wealth Dynamics in General Equilibrium (2023)
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