Santos Monteiro, Paulo (2005): Family labor supply, precautionary behavior, aggregate saving and employment.
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I study the impact of idiosyncratic earnings uncertainty on aggregate saving and employment in an economy populated by families consisting of two members. Families incur a fixed cost of participation when both members are employed. I argue that, because of market incompleteness and private information, the presence of this fixed cost can generate multiplicity of equilibrium. In particular there might be one equilibrium with high (female) employment and low savings and another one with low employment and high savings. The model suggests that aggregate saving and employment rates should be negatively correlated across countries. Finally, I present empirical evidence that supports both the partial and the general equilibrium predictions of the model.
|Item Type:||MPRA Paper|
|Institution:||Université Libre de Bruxelles|
|Original Title:||Family labor supply, precautionary behavior, aggregate saving and employment|
|Keywords:||Aggregate saving; Employment; Family labor supply; Multiplicity|
|Subjects:||J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E21 - Consumption; Saving; Wealth
|Depositing User:||Paulo Santos Monteiro|
|Date Deposited:||09. Mar 2007|
|Last Modified:||12. Feb 2013 04:35|
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