Wealth and Consumption After Job Displacement

2021 ◽  
pp. 1-29
Author(s):  
Justin Barnette
Keyword(s):  
Life Cycle ◽  
Panel Study ◽  
Job Displacement ◽  
Income Dynamics ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Large Drop ◽  
Long Run ◽  
The Usa ◽  
Standard Life

Abstract Income drops permanently after an involuntary job displacement, but it has never been clear what happens to long run wealth in the USA. Upon displacement, wealth falls 14% relative to workers of the same age and similar education from the Panel Study of Income Dynamics (PSID). Their wealth is still 18% lower 12 years after the event. A standard life cycle model calibrated to US data with permanent decreases in income after displacement behaves differently than these findings. The agents in the model also experience a large drop in wealth but they recover. The biggest culprit for these differences is small and statistically insignificant changes to consumption in the PSID whereas agents in the model decrease their consumption considerably. Extending the model to include habit formation reconciles some of these differences by generating similar long run effects on wealth. This allows for the examination of wealth at death through the lens of the model.

scholarly journals When will the eel recover? A full life-cycle model

2007 ◽  
Vol 64 (7) ◽  
pp. 1491-1498 ◽  
Author(s):  
Mårten Åström ◽  
Willem Dekker
Keyword(s):  
Life Cycle ◽  
Distribution Area ◽  
European Eel ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Glass Eel ◽  
Full Life Cycle ◽  
Long Run ◽  
Spawning Stock ◽  
Full Life

Abstract Åström M., and Dekker W. 2007. When will the eel recover? A full life-cycle model. – ICES Journal of Marine Science, 64: 000–000: –. The European eel population has declined over the past decades in most of its distribution area, and the stock is outside safe biological limits. The EU has taken up the challenge to design a management system that ensures the escapement of 40% of spawning-stock biomass, relative to unexploited, unpolluted circumstances in unobstructed rivers. This ultimately aims to restore the spawning stock to a level at which glass eel production is not impaired, i.e. to restore to full historical glass eel recruitment. To explore the trajectory from the current depleted state to full recruitment recovery, we developed a simple model of stock dynamics, based on a simplified stock–recruitment relationship and the conventional dynamic pool assumptions. Recruitment trajectories under different future fishery regimes are explored, for the medium (one generation time) and long time-span (until full recruitment recovery). Reducing fisheries to zero, recovery is expected within ∼80 years, whereas under an ultimately sustainable fishing regime of just 10% of the current rate of fishing mortality, recovery may take more than 200 years. Moreover, management regimes, apparently leading to slight recovery of the stock in the coming 5–15 years, might still be unsustainable in the long run.

ECONOMIC-DEMOGRAPHIC DEPENDENCY RATIO IN A LIFE-CYCLE MODEL

2019 ◽  
Vol 24 (7) ◽  
pp. 1635-1673
Author(s):  
Sau-Him P. Lau ◽  
Albert K. Tsui
Keyword(s):  
Life Cycle ◽  
Population Aging ◽  
Retirement Age ◽  
Dependency Ratio ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Stochastic Mortality ◽  
The Usa ◽  
Definition Of ◽  
Parameter Values

The conventional dependency ratio based on cohort-invariant cutoff points could overstate the true burden of population aging. Using optimal cohort-varying years of schooling and retirement age in a life-cycle model, we propose a modified definition of dependency ratio. We compare the proposed economic-demographic dependency ratio (EDDR) with the conventional definition and find that the conventional dependency ratio of the USA is projected to increase by 0.105 from 2010 to 2060, which is an over-projection of 86% when compared with the projected increase of 0.015 in the EDDR over the same period. Sensitivity analysis suggests that our finding is quite robust to reasonable changes in parameter values (except for one parameter), and the magnitude of over-projection ranges mainly from 0.079 to 0.102 (i.e., 75% to 97%). We follow the well-established Lee–Carter model to forecast stochastic mortality and employ the method of expanding duration to decompose the sources of over-projection.

scholarly journals Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy

2010 ◽  
Vol 48 (3) ◽  
pp. 693-751 ◽  
Author(s):  
Orazio P Attanasio ◽  
Guglielmo Weber
Keyword(s):  
Public Policy ◽  
Life Cycle ◽  
Point Of View ◽  
Theoretical Point ◽  
Critical Survey ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Intertemporal Allocation ◽  
Consumption And Saving ◽  
Standard Life

This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of view. It discusses several approaches that have been taken in the literature to bring the model to the data, their empirical successes, and their failures. Finally, the paper reviews a number of changes to the standard life cycle model that could help solve the remaining empirical puzzles.

scholarly journals A historical welfare analysis of Social Security: Whom did the program benefit?

10.3982/qe657 ◽  
2019 ◽  
Vol 10 (4) ◽  
pp. 1357-1399 ◽  
Author(s):  
William B. Peterman ◽  
Kamila Sommer
Keyword(s):  
Life Cycle ◽  
Steady State ◽  
Social Security ◽  
Welfare Effects ◽  
Welfare Effect ◽  
Life Cycle Model ◽  
Cycle Model ◽  
The Great Depression ◽  
Standard Life ◽  
Program Benefit

A well‐established result in the literature is that Social Security reduces steady state welfare in a standard life cycle model. However, less is known about the historical quantitative effects of the program on agents who were alive when the program was adopted. In a computational life cycle model that simulates the Great Depression and the enactment of Social Security, this paper quantifies the welfare effects of the program's enactment on the cohorts of agents who experienced it. In contrast to the standard steady state results, we find that the adoption of the original Social Security generally improved these cohorts' welfare, in part because these cohorts received far more benefits relative to their contributions than they would have received if they lived their entire life in the steady state with Social Security. Moreover, the negative general equilibrium welfare effect of Social Security associated with capital crowd‐out was reduced during the transition, because it took many periods for agents to adjust their savings levels in response to the program's adoption. The positive welfare effect experienced by these transitional agents offers one explanation for why the program that may reduce welfare in the steady state was originally adopted.

Company life cycle model: The influence of interior and exterior factors

2020 ◽  
Author(s):  
Oleg Malafeyev ◽  
Irina Zaitseva ◽  
Sergey Sychev ◽  
Gennady Badin ◽  
Ilya Pavlov ◽  
...  
Keyword(s):  
Life Cycle ◽  
Life Cycle Model ◽  
Cycle Model

Marriage as a Mechanism of Internalizing Externalities: A Case of Smoking

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Jane J. You
Keyword(s):  
Positive Impact ◽  
Panel Study ◽  
Legal Institution ◽  
Income Dynamics ◽  
Negative Externalities ◽  
Long Run ◽  
Married Individuals

Abstract With the view of marriage as a legal institution to internalize externalities, I examine the effect of marriage on smoking. From analyzing the data of Panel Study of Income Dynamics, I found that unmarried individuals are more likely to smoke by 4.9% point than married individuals with stronger impact on females. The long-run impact of marriage also shows that the unmarried individuals smoke more than married individuals but some of its positive impact diminishes within two years. These results on the whole imply that marriage internalizes the negative externalities of smoking and thus leads smokers to reduce smoking.

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