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Ex-ante and ex-post Effects of Employment Risk on Savings and Labour Supply

Objective



Research objectives and content

The aim of this research is to analyse the way in which individuals react to the presence of employment risk and, in particular, the effects of this risk on savings and labour supply. The reason for this type of analysis is to highlight the interaction between different self-insurance mechanisms and, therefore, the possible effects of a change in the institutional settings faced by individuals.

More precisely, the research agenda includes two main objectives:
a. to examine the empirical evidence on the non-separability between consumption and leisure in an intertemporal context, with particular attention to the individuals' willingness to use labour supply as a mean to insure against employment risk and as a response to negative income shocks; b. to extend the theoretical understanding of the phenomenon under investigation by considering the implications of non-separability and employment risk for the Euler equation of consumption, by examining the optimal response to the presence of risk with different structures of preferences and by including in the model agents' behaviour after retirement.

Training content (objective, benefit and expected impact)

Training will focus on the methodological issues involved in moving from theoretical to empirically testable specifications of the functions of interest and on the new developments in integrating direct estimation techniques with simulation techniques. This second aspect is particularly important because the complexity of the problem suggests that standard econometric techniques would not permit to recover from the data the information of interest.

Links with industry / industrial relevance (22)

Funding Scheme

RGI - Research grants (individual fellowships)

Coordinator

UNIVERSITY COLLEGE LONDON.
Address
Gower Street
London
United Kingdom