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Unemployment Dynamics and Social Security

Juan Rojas () and Silvio Rendon ()

No 170, Econometric Society 2004 Latin American Meetings from Econometric Society

Abstract: The goal of this paper is to determine the effects of different social security regimes on job search. A less generous pension system induces higher savings across the life cycle and makes agents wealthier and thus more reluctant to accept low wage offers. On the other hand, as the social security system provides insurance against labor shocks, such as layoffs and future unemployment spells, a less generous system induces agents to accept bad job offers to save for retirement. To determine the strength of each effect, we develop a life-cycle overlapping generations model with job search, savings and a fully funded social security system. After obtaining the parameters that match the predicted moments to the observed path of employment states, wages, and assets, we compute the effects of alternative social security regimes in the U.S. economy.

Keywords: Job search; social security; savings; asset accumulation liquidity constraints; retirement. (search for similar items in EconPapers)
JEL-codes: E21 H55 J64 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-dge and nep-pbe
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Related works:
Working Paper: Unemployment Dynamics and Social Security (2004)
Working Paper: Unemployment Dynamics and Social Security (2004)
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