27/11/2025 - 12:45 - Doyen 22

Alireza Sepahsalari

(University of Bristol)

will give a presentation on

Self-Insurance and Welfare in Turbulent Labor Markets

Abstract

We examine the impact of wealth on shaping labor market outcomes under turbulence risk—the risk of skill loss following job displacement. We develop and quantify a heterogeneous-agent search model with incomplete markets, skill dynamics, and job tiers. Wealth affects workers’ occupational mobility, generating heterogeneous wage outcomes following job displacement. Using U.S. data, we document that poor workers suffer the most significant and most persistent wage losses upon reemployment, in line with the model predictions. Though policy exercises, we show that unemployment insurance increases welfare, while job creation subsidies more effectively stimulate output and reduce unemployment spells, highlighting novel trade-offs between policy instruments.

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