Santos-Monteiro, Paulo (2008) Family labor supply and aggregate saving. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers).

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Abstract

I study the impact of idiosyncratic risk on savings and employment in a small open economy populated by two-member families. Families incur a fixed cost of participation when both members are employed. Because of market incompleteness and information asymmetries, this cost coupled with labor market frictions can generate multiple equilibria. In particular, there might be one equilibrium with high employment and low saving and another one with low employment and high saving. The model predicts that aggregate saving and employment rates are negatively correlated across countries. I present empirical evidence that supports the general equilibrium prediction of the model.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HQ The family. Marriage. Woman H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Saving and investment, Macroeconomics, Labor supply, Information asymmetry
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	23 October 2008
Number:	No.875
Number of Pages:	30
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Fundação para a Ciência e a Tecnologia (FCT)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1342

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