nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒11‒12
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Household Debt and Income Inequality, 1963-2003 By Matteo Iacoviello
  2. The Effect of Job Satisfaction on Job Search: Not just whether, but also where By Josse Delfgaauw
  3. Worker Absenteeism in Search Equilibrium By Engström, Per; Holmlund, Bertil

  1. By: Matteo Iacoviello (Boston College)
    Abstract: I construct a heterogeneous agents economy that mimics the time-series behavior of the US earnings distribution from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks driving the model using data on income inequality, on aggregate income and on measures of financial liberalization. I show how the model economy can replicate two empirical facts: the trend and cyclical behavior of household debt, and the diverging patterns in consumption and wealth inequality over time. In particular, I show that, while short-run changes in household debt can be accounted for by aggregate fluctuations, the rise in household debt of the 1980s and the 1990s can be quantitatively explained only by the concurrent increase in income inequality.
    Keywords: Credit constraints, Incomplete Markets, Income Inequality, Household Debt
    JEL: E31 E32 E44 E52 R21
    Date: 2005–11–03
  2. By: Josse Delfgaauw (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: Using survey data of public sector employees in the Netherlands, this paper shows that workers' satisfaction with various job domains not only affects whether but also where workers search for another job. An intuitive pattern emerges. Workers try to leave their current employer when their job search is instigated by dissatisfaction with an organisation-specific job domain, like management. Conversely, more job-specific problems, like a lack of autonomy, lead workers to opt for another position within their current organisation. Dissatisfaction with job domains which may have an industry-specific component, such as job duties, drives workers out of their industry. These findings suggest that on-the-job experience provides workers with information about the quality of their own job as well as of other jobs in their organisation and industry.
    Keywords: Job search; job satisfaction; public sector employees
    JEL: J28 J45 J63 M54
    Date: 2005–10–21
  3. By: Engström, Per (Department of Economics); Holmlund, Bertil (Department of Economics)
    Abstract: The paper presents a tractable general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state. Absenteeism is driven by random shocks to the value of leisure that are private information to the workers. Firms offer wages, and possibly sick pay, so as to maximize expected profits, recognizing that the compensation package affects the queue of job applicants and possibly the absence rate as well. Shocks to the value of leisure among nonemployed individuals interact with their search decisions and trigger movements into and out of the labor force. The analysis provides a number of results concerning the impact of social insurance benefits and other determinants of workers’ and firms’ behavior. For example, higher nonemployment benefits are shown to increase absenteeism among employed workers. The normative anlysis identifies externalities associated with firm-provided sick pay and examines the welfare implications of alternative policies. Conditions are given under which welfare equivalence holds between publicly provided and firm-provided sick pay. Benefit differentiation across states of non-work are found to be associated with non-trival welfare gains.
    Keywords: Absenteeism; search; unemployment; social insurance
    JEL: J21 J64 J65
    Date: 2005–11–01

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