EconPapers    
Economics at your fingertips  
 

Borrowing Constraints, Search, and Life-Cycle Inequality

Benjamin Griffy ()

Discussion Papers from University at Albany, SUNY, Department of Economics

Abstract: This paper quantifies the impact of borrowing constraints on consumption and earnings inequality in a life-cycle model with labor market search and endogenous human capital accumulation. I first show that following an unemployment spell, likely-constrained workers in the Survey of Income and Program Participation match to jobs that pay more per quarter when they receive an increase in their unemployment insurance. I then construct a life-cycle model with risk averse workers who face borrowing constraints, accumulate human capital endogenously, and search both on and off the job. I use indirect inference to estimate the model parameters, and show that wealth inequality causes both placement into lower-paying jobs as well as slower human capital accumulation when workers face borrowing constraints. Unemployment risk is partially responsible for this change in human capital accumulation. I compare changes in initial conditions and find that a standard deviation decrease in initial wealth causes a larger decline in life-cycle consumption than a standard deviation decrease in initial human capital.

New Economics Papers: this item is included in nep-dge
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.albany.edu/economics/research/workingp/2018/Griffy_JMP.pdf (application/pdf)

Related works:
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:nya:albaec:18-01

Ordering information: This working paper can be ordered from
Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A.
http://www.albany.ed ... workingp/index.shtml

Access Statistics for this paper

More papers in Discussion Papers from University at Albany, SUNY, Department of Economics Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A..
Bibliographic data for series maintained by Byoung Park ().

 
Page updated 2019-11-12
Handle: RePEc:nya:albaec:18-01