Cautious Careers: Job Mobility under Incomplete Markets / Alex Clymo, Piotr Denderski, Yusuf Mercan, Benjamin Schoefer.

Format:

Book

Author/Creator:

Clymo, Alex.

Contributor:

Denderski, Piotr.

Mercan, Yusuf.

Schoefer, Benjamin.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w35580.

NBER working paper series no. w35580

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2026.

Summary:

Job mobility is risky, workers are risk averse, and insurance markets are incomplete. This paper studies how these features curb and distort job-to-job transitions by making workers excessively cautious: they place too much weight on job safety over wage and productivity gains. We demonstrate this tradeoff by eliciting employed workers' wage-safety indifference curves in a custom, representative survey. On average, employed US workers require a 1.63% pay raise to accept each additional percentage point of annual unemployment risk in a new job. We assess the macroeconomic consequences of our mechanism by embedding it into a general equilibrium search model. Jobs differ in both wages (productivity) and unemployment risk, and risk-averse workers self-insure against unemployment risk through a non-state-contingent bond while searching on and off the job. We find that a complete markets counterfactual would boost job mobility by 12% and productivity by 0.19%. We also highlight a new role for unemployment insurance: it encourages employed workers to accept risky but high-productivity offers, thereby increasing productivity (by 1.3%) and job creation--as well as job loss and unemployment.

Notes:

August 2026.

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