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Title:Labor supply and saving under uncertainty PDF Logo
Authors:Flodén, Martin
Issue Date:2005
Series/Report no.:SSE/EFI Working Paper Series in Economics and Finance 597
Abstract:This paper examines how variations in labor supply can be used to self-insure against wage uncertainty, and the impact of such self-insurance on precautionary saving. The analytical framework is a two-period model with saving and labor-supply decisions where preferences are consistent with balanced growth. The main findings are that (i) labor-supply flexibility raises precautionary saving when future wages are uncertain, and (ii) uncertainty about future wages raises current labor supply and reduces future labor supply.
Subjects:precautionary saving
prudence
labor supply
JEL:D81
E21
Document Type:Working Paper
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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