Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, Taxes, and Social Security

Lars Ljungvist and Thomas Sargent
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Lars Ljungvist: Stockholm School of Economics
Authors registered in the RePEc Author Service: Lars Ljungqvist

Review of Economic Dynamics, 2014, vol. 17, issue 1, 1-20

Abstract: The same high labor supply elasticity that characterizes a representative family model with indivisible labor and employment lotteries can also emerge without lotteries when self-insuring individuals choose career lengths. Off corners, the more elastic the earnings profile is to accumulated working time, the longer is a worker's career. Negative (positive) unanticipated earnings shocks reduce (increase) the career length of a worker holding positive assets at the time of the shock, while the effects are the opposite for a worker with negative assets. By inducing a worker to retire at an official retirement age, government provided social security can attenuate responses of career lengths to earnings profile slopes, earnings shocks, and taxes. (Copyright: Elsevier)

Keywords: Career length; indivisble labor; Earnings profile; Earnings shocks; Taxes; Social security; Labor supply elasticity (search for similar items in EconPapers)
JEL-codes: E24 J22 J26 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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DOI: 10.1016/j.red.2013.04.001

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