This paper studies the savings and employment effects of the asset means‐test in US income support programs using a structural life‐cycle model with productivity, disability, and unemployment risk. An asset means‐test incentivizes low‐income households to hold few financial assets making...

We empirically establish that one-third of job transitions leads to wage losses. Using a quantitative on-the-job search model, we find that 60 percent of them are movements down the job ladder. Accounting for them, our baseline calibration matches the large residual wage inequality in US data...