Employment Stability, Earnings Dynamics, and Life-Cycle Savi ngs
Abstract:
Labor markets are characterized by large heterogeneity in employment stability: s ome workers hold stable, lifetime jobs, while others cycle frequently in an d out of employment. This heterogeneity will shape the earnings dynamics an d savings behavior of workers. Yet, how much and in what way remains a larg ely unexplored question. We fill this gap with an empirical and a quantitat ive theory answer. We first document two new empirical facts: (1) workers w ith more stable employment experience faster earnings growth and (2) accumu late more wealth per dollar of income. Second, we develop a life-cycle mode l that combines a labor market search model with an incomplete markets mode l of saving behavior. We use the model to interpret the empirical facts, to establish a causal link from employment stability to wealth accumulation, and to quantify the drivers of the underlying mechanism.
Our results support an important role of employment stabil ity heterogeneity in accounting for differences in wealth accumulation.
DTSTAMP:20260526T022000Z DTSTART:20250609T163000Z DTEND:20250609T180000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR