Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56124
Authors: 
Flodén, Martin
Year of Publication: 
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

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