Insurance and opportunities: A welfare analysis of labor market risk

• 成果类型: Article
• 署名作者: Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L.
• 署名单位: University of Oslo; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; Georgetown University; New York University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2008.02.001
• 发表日期: 2008
• 页码: 501-525
• 关键词: insurance; labor supply; PRODUCTIVITY; wage dispersion; welfare

摘要

Using a model with constant relative risk-aversion preferences, endogenous labor supply and partial insurance against idiosyncratic wage risk, this paper provides an analytical characterization of three welfare effects: (a) the welfare effect of a rise in wage dispersion, (b) the welfare gain from completing markets, and (c) the welfare effect from eliminating risk. The analysis reveals an important trade-off for these welfare calculations. On the one hand, higher wage uncertainty increases the cost associated with missing insurance markets. On the other hand, greater wage dispersion presents opportunities to raise aggregate productivity by concentrating market work among more productive workers. Welfare effects can be expressed in terms of the underlying parameters defining preferences and wage risk or, alternatively, in terms of changes in observable second moments of the joint distribution over individual wages, consumption and hours. (C) 2008 Elsevier B.V. All rights reserved.