Search in the Labor Market under Imperfectly Insurable Income Risk

September 1, 2009

Preview Citation

Format: Chicago

Mauro F Roca. Search in the Labor Market under Imperfectly Insurable Income Risk, (USA: International Monetary Fund, 2009) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper develops a general equilibrium model with unemployment and noncooperative wage determination to analyze the importance of incomplete markets when risk-averse agents are subject to idiosyncratic employment shocks. A version of the model calibrated to the U.S. shows that market incompleteness affects individual behavior and aggregate conditions: it reduces wages and unemployment but increases vacancies. Additionally, the model explains the average level of unemployment insurance observed in the U.S. A key mechanism is the joint influence of imperfect insurance and risk aversion in the wage bargaining. The paper also proposes a novel solution to solve this heterogeneous-agent model.

Subject: Consumption, Insurance, Labor markets, Unemployment, Wages

Keywords: Labor market, Replacement ratio, Unemployment insurance, WP

Publication Details

Pages:

37
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2009/188
Stock No:

WPIEA2009188
ISBN:

9781451873351
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers