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Empirical studies find that the age-variance profile of wages is U-shaped. The objective of this paper is to explore … firm-worker matches. Three factors shape the age-inequality profile of wages in the model economy: the time horizon before … the U-shape of the age-inequality profile of wages if the bargaining power of workers is sufficiently high. Furthermore …
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-step empirical strategy. First, a minimum distance estimation disentangles the aggregate from the idiosyncratic permanent component …
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We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both...
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The analytic innovation is treating life's end as uncertain, and life expectancy as partly the product of individuals' efforts to self-protect against mortality and morbidity risks. The demand for self-protection is modeled in a stochastic, life-cycle framework under alternative insurance...
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