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12:30 - 14:00 3 December 2014

Household Search and the Aggregate Labor Market

Location

Room B06 | Drayton House (link Map)
30 Gordon Street | London | WC1H 0AN | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Jochen Mankart, Bundesbank

Sharing risks is one of the essential economic roles of families. The importance of this role increases in the amount of uncertainty that agents face in the labor market and in the degree of financial market incompleteness. We develop a theory of joint household search in frictional labor markets under incomplete financial markets. Couples households can insure themselves by savings and by timing their labor market participation. We show that this theory can match one aspect of the US data that conventional search models, that do not incorporate joint household search, cannot match. In the data aggregate employment is pro-cyclical and unemployment counter-cyclical, but their sum, the labor force is acyclical. In our model, and in the US data, when a family member loses her job in a recession the other family member joins the labor force to provide insurance.


Contact

Department of Economics - Reception
020 7679 5888


Links

Seminar paper


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