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Consumption and savings with unemployment risk: implications for optimal employment contracts
Pissarides, Christopher - London School of Economics (LSE) - 2002
This paper derives optimal employment contracts when workers are risk averse and there are employment and unemployment risks. Without income insurance, consumption rises during employment and falls during unemployment. Optimal employment contracts offer severance compensation to smooth...
Persistent link: https://www.econbiz.de/10010928803
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The objective benefits of subjective well-being
De Neve, Jan-Emmanuel; Diener, Ed; Tay, Louis; Xuereb, Cody - London School of Economics (LSE) - 2013
The aim of this paper is to survey the 'hard' evidence on the effects of subjective well-being. In doing so, we complement the evidence on the determinants of well-being by showing that human well-being also affects outcomes of interest such as health, income, and social behaviour. Generally, we...
Persistent link: https://www.econbiz.de/10010745197
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A model of aggregate demand and unemployment
Michaillat, Pascal; Saez, Emmanuel - London School of Economics (LSE) - 2013
We present a static model of aggregate demand and unemployment. The economy has a nonproduced good, a produced good, and labor. Product and labor markets have matching frictions. A general equilibrium is a set of prices, market tightnesses, and quantities such that buyers and sellers optimize...
Persistent link: https://www.econbiz.de/10010745710
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Labor income risk and asset returns
Julliard, Christian - London School of Economics (LSE) - 2007
This paper shows, from the consumer’s budget constraint, that expected future labor income growth rates and the residuals of the cointegration relation among log consumption, log asset wealth and log current labor income (summarized by the variable cay of Lettau and Ludvigson (2001a)), should...
Persistent link: https://www.econbiz.de/10011071442
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The macroeconomic role of unemployment compensation
Blumkin, Tomer; Hadar, Yossi; Yashiv, Eran - London School of Economics (LSE) - 2009
enhancing the assignment of workers to jobs in the face of firm productivity heterogeneity and skill-biased technological change …. It shows that in order to do so policy needs to be a function of the properties of the firm’s productivity distribution … emerging from the analysis is that the degree of firm productivity heterogeneity, in terms of skewness and variance, matters …
Persistent link: https://www.econbiz.de/10010745921
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Portfolio choice with internal habit formation : a life-cycle model with uninsurable labor income risk
Gomes, Francisco J.; Michaelides, Alexander - London School of Economics (LSE) - 2003
Motivated by the success of internal habit formation preferences in explaining asset pricing puzzles, we introduce these preferences in a life-cycle model of consumption and portfolio choice with liquidity constraints, undiversifiable labor income risk and stock-market participation costs. In...
Persistent link: https://www.econbiz.de/10010928771
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Policy uncertainty and precautionary savings
Giavazzi, Francesco; McMahon, Michael - London School of Economics (LSE) - 2008
In 1997 Chancellor Kohl proposed a major pension reform: he pushed the law through Parliament explaining that the German PAYG system had become unsustainable. One limitation of the new law - one that is crucial for our identification strategy - is that it left the generous pension entitlements...
Persistent link: https://www.econbiz.de/10010928811
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Asset pricing with limited risk sharing and heterogeneous agents
Gomes, Francisco; Michaelides, Alexander - London School of Economics (LSE) - 2005
We solve a model with incomplete markets and heterogeneous agents that generates a large equity premium, while simultaneously matching stock market participation and individual asset holdings. The high risk premium is driven by incomplete risk sharing among stockholders, which results from the...
Persistent link: https://www.econbiz.de/10010744865
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Are annuities value for money?: who can afford them?
Lopes, Paula - London School of Economics (LSE) - 2003
This paper solves an empirically parameterized model of households’ optimal demand for nominal and inflation indexed annuities. The model incorporates mortality, inflation, and real interest rate risk. The model draws some interesting predictions. First, the welfare calculations on the access...
Persistent link: https://www.econbiz.de/10010745194
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Rare events and annuity market participation
Lopes, Paula; Michaelides, Alexander - London School of Economics (LSE) - 2005
We investigate whether a rare event (like the default of the annuity provider) can explain the annuity market participation puzzle. High risk aversion is needed to change behavior in the presence of such a disastrous shock but higher risk aversion also makes annuities more valuable. Therefore,...
Persistent link: https://www.econbiz.de/10010745400