Isaac Baley

joint seminars
amse seminar
Macro and labor market seminar

Isaac Baley

Universitat Pompeu Fabra
Self-insurance in turbulent labor markets
Joint with
Ana Figueiredo, Cristiano Mantovani, Alireza Sepahsalari
Venue

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Monday, May 22 2023| 11:30am to 12:45pm
Contact(s)

Ewen Gallic: ewen.gallic[at]univ-amu.fr
Avner Seror: avner.seror[at]univ-amu.fr
Andreas Dibiasi: andreas.dibiasi[at]univ-amu.fr
Céline Poilly: celine.poilly[at]univ-amu.fr

Abstract

We investigate the welfare consequences of turbulence risk—the risk of skill loss coinciding with involuntary layoffs—on individual and aggregate labor market outcomes. We build a tractable dynamic heterogeneous agents model with directed search, imperfect financial markets, and uninsurable persistent labor market risk. We calibrate our model to the US economy, matching new empirical facts on the joint impact of turbulence risk and wealth on re-employment wages, occupational mobility, and unemployment duration. We measure the welfare loss of unemployment transitions and quantify the role of precautionary savings, precautionary job search, and precautionary occupational mobility as self-insurance mechanisms. Finally, we examine the welfare gain from alternative government policies.

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