Wealth, Search, and the Job Ladder

Katsuhiro Komatsu

No 1133, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper studies how the wealth accumulation of workers and their job search behavior influence firm wage setting. I incorporate wealth accumulation and endogenous search intensity of risk-averse workers into an equilibrium job-ladder model. The wagesensitive search of wealth-poor workers restrains wage markdowns near the bottom of the job ladder. Removing this discipline through complete markets allows low-wage firms to further push down wages, lowering the average wage and raising wage inequality. This firm-side response, which I call the insurance channel, offsets the direct consumption-smoothing gain of unemployment insurance.

Keywords: Wage; Saving; Search; Unemployment; Unemployment Insurance (search for similar items in EconPapers)
JEL-codes: D83 E21 E24 J30 (search for similar items in EconPapers)
Pages: 77pages
Date: 2026-10
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