Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2003-04-09
Number: 03-032/2
Author-Name: Leon J.H. Bettendorf
Author-Email: bettendorf@few.eur.nl
Author-Workplace-Name: OCFEB, Erasmus University Rotterdam
Author-Name: D. Peter Broer
Author-Email: broer@few.eur.nl
Author-Workplace-Name: OCFEB, Erasmus University Rotterdam
Title: Lifetime Labor Supply in a Search Model of Unemployment
Abstract: This paper investigates the age-dependency of participation andunemployment by integrating job search with intertemporal optimizing behaviorof finitely-lived households. We find that search frictions and tax ratesdistort the decisions of older workers to a much larger extent than that ofyoung workers. This finding provides an explanation of the observed fall ofparticipation rates of elder workers as a result of the post-war increase intax rates and replacement rates. We show that the age pattern of searchunemployment does not match observed unemployment and we propose a new conceptof 'voluntary' unemployment that agrees well with observations.
Classification-JEL: J64; D91; J31.
Keywords: search frictions; labor supply; life cycle; unemployment; retirement.
File-Url: https://papers.tinbergen.nl/03032.pdf
File-Format: application/pdf
File-Size: 310578 bytes
Handle: RePEc:tin:wpaper:20030032