The Reservation Wage under CARA and Limited Borrowing

Bauer, Christian (15. März 2009): The Reservation Wage under CARA and Limited Borrowing. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2009-8

Abstract

A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.

• Dokumententyp: Paper
• Keywords: labor income risk, wealth-dependent reservation wage, borrowing limit
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics ; Volkswirtschaft > Munich Discussion Papers in Economics > Makroökonomik ; Volkswirtschaft > Munich Discussion Papers in Economics > Arbeit ; Volkswirtschaft > Munich Discussion Papers in Economics > Mathematische Methoden
• Themengebiete: 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie ; 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: C61, E21, D91, J64
• Sprache: Englisch

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