Lifetime Labor Supply in a Search Model of Unemployment

Tinbergen Institute Discussion Paper No. 03-032/2

37 Pages Posted: 16 Apr 2003

See all articles by Leon J.H. Bettendorf

Leon J.H. Bettendorf

Erasmus University Rotterdam (EUR)

Peter Broer

Tilburg University - CentER, Faculty of Economics and Business Administration; CPB Netherlands Bureau for Economic Policy Research

Date Written: March 31, 2003

Abstract

This paper investigates the age-dependency of participation and unemployment by integrating job search with intertemporal optimizing behavior of finitely-lived households. We find that search frictions and tax rates distort the decisions of older workers to a much larger extent than that of young workers. This finding provides an explanation of the observed fall of participation rates of elder workers as a result of the post-war increase in tax rates and replacement rates. We show that the age pattern of search unemployment does not match observed unemployment and we propose a new concept of 'voluntary' unemployment that agrees well with observations. unemployment, retirement

Keywords: search frictions, labor supply, life cycle,

JEL Classification: J64, D91, J31

Suggested Citation

Bettendorf, Leon J.H. and Broer, Peter, Lifetime Labor Supply in a Search Model of Unemployment (March 31, 2003). Tinbergen Institute Discussion Paper No. 03-032/2, Available at SSRN: https://ssrn.com/abstract=394580 or http://dx.doi.org/10.2139/ssrn.394580

Leon J.H. Bettendorf (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081808 (Phone)

Peter Broer

Tilburg University - CentER, Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://center.uvt.nl/staff/broer/

CPB Netherlands Bureau for Economic Policy Research ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands
+31 70 33 83 478 (Phone)
+31 70 33 83 350 (Fax)

HOME PAGE: http://www.cpb.nl/eng/general/org/homepages/dpb/

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