A Life-Cycle Model of Trans-Atlantic Employment Experiences

Sagiri Kitao, Lars Ljungqvist and Thomas Sargent

Review of Economic Dynamics, 2017, vol. 25, 320-349

Abstract: To understand trans-Atlantic employment experiences since World War II, we build an overlapping generations model with two types of workers (high school and college graduates) whose different skill acquisition technologies affect their career decisions. Search frictions affect short-run employment outcomes. The model focuses on labor supply responses near beginnings and ends of lives and on whether unemployment and early retirements are financed by personal savings or public benefit programs. Higher minimum wages in Europe explain why youth unemployment has risen more there than in the U.S. Turbulence, in the form of higher risks of human capital depreciation after involuntary job destructions, causes long-term unemployment in Europe, mostly among older workers, but leaves U.S. unemployment unaffected. The losses of skill interact with workers' subsequent decisions to invest in human capital in ways that generate the age-dependent increases in autocovariances of income shocks observed by Moffitt and Gottschalk (1995). (Copyright: Elsevier)

Keywords: Heterogeneity; Search frictions; Experience; Human capital; Disutility of work; Aging; Job tenure; Unemployment duration; Hazard rate; Early retirement; Earnings volatility; Autocovariance of income shocks; Unemployment benefits; Job protection; Minimum wage (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://dx.doi.org/10.1016/j.red.2016.08.001
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See https://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "A Life-Cycle Model of Trans-Atlantic Employment Experiences" (2016)
Working Paper: A Life-Cycle Model of Trans-Atlantic Employment Experiences (2016)
Working Paper: A Life Cycle Model of Trans-Atlantic Employment Experiences (2009)
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: https://EconPapers.repec.org/RePEc:red:issued:16-93

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2016.08.001

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().