Citation

Discussion Paper Details

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Title: Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, and Social Security

Author(s): Lars Ljungqvist and Thomas J Sargent

Publication Date: May 2010

Keyword(s): career length, earnings profile, earnings shocks, indivisible labor, labor supply elasticity, social security and taxes

Programme Area(s): International Macroeconomics and Labour Economics

Abstract: The high labor supply elasticity in an indivisible-labor model with employment lotteries emerges also without lotteries when individuals must instead choose career lengths. The more elastic are earnings to accumulated working time, the longer is a worker's career. Negative (positive) unanticipated earnings shocks reduce (increase) the career length of a worker holding positive assets at the time of the shock, while the effects are the opposite for a worker with negative assets. Government provided social security can attenuate responses of career length to earnings profile slope and earnings shocks by inducing a worker to retire at an official retirement age.

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Bibliographic Reference

Ljungqvist, L and Sargent, T. 2010. 'Career Length: Effects of Curvature of Earnings Profiles, Earnings Shocks, and Social Security'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7822