Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, and Social Security
Lars Ljungqvist and
Thomas Sargent ()
No 7822, CEPR Discussion Papers from C.E.P.R. Discussion Papers
The high labor supply elasticity in an indivisible-labor model with employment lotteries emerges also without lotteries when individuals must instead choose career lengths. The more elastic are earnings 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. Government provided social security can attenuate responses of career length to earnings profile slope and earnings shocks by inducing a worker to retire at an official retirement age.
Keywords: career length; earnings profile; earnings shocks; indivisible labor; labor supply elasticity; social security; taxes (search for similar items in EconPapers)
JEL-codes: E24 J22 J26 (search for similar items in EconPapers)
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