New CEPR Discussion Paper - DP21861 Cautious Careers: Job Mobility under Incomplete Markets @alexclymo @PSEinfo, @PDenderski @uniofleicester, Yusuf Mercan @KansasCityFed, @Schoefer_B @UCBerkeley @berkeleyecon ow.ly/UV9V50ZCo2b #CEPR_LE #CEPR_MEF #CEPR_MG #CEPR_PE #EconTwitter

New paper: Cautious Careers: Job Mobility under Incomplete Markets w/@PDenderski @alexclymo @ayusufmercan Idea: 1) Switching jobs is risky. 2) We are risk-averse. 3) Insurance markets are incomplete. =>Workers avoid risky jobs =>Lower wage growth & productivity =>UI can help

What holds back job-to-job mobility and productivity growth? The role of risk aversion and incomplete markets, and a new, pro-growth role for unemployment insurance, from Alex Clymo, Piotr Denderski, @ayusufmercan, and @Schoefer_B nber.org/papers/w35580

🚨 New Working Paper Alert 🚨 "Cautious Careers: Job Mobility under Incomplete Markets" is now available as NBER Working Paper 35580: nber.org/papers/w35580. Started more than 8 years ago as two separate projects by two teams on each side of the Atlantic that shared the same idea: changing jobs can be *risky*, and some workers might pursue safer but less productive jobs. Yes, we did take our time, but sometimes that's what it takes to get things right! Our headline policy result is: moderately generous unemployment insurance can mean more jobs, not fewer. Beyond insuring the unemployed, UI subsidizes risky job-taking by employed workers, and their greater willingness to accept outside offers makes it easier for firms to fill vacancies, encouraging job creation. Cutting UI back to bare social assistance would lower aggregate productivity by about 1.3%, almost entirely through employed workers turning down risky but productive offers. Where does this come from? Together with the fantastic trio of @alexclymo, @ayusufmercan and @Schoefer_B, we are the first to provide direct empirical evidence on how much US workers are willing to pay for extra job security. In a tailor-made module of the nationally representative AmeriSpeak survey (NORC), we elicit workers' indifference curves between pay and unemployment risk. The headline number: the average US worker demands a 1.63% pay raise to accept each additional percentage point of annual layoff risk. And consistent with the role of incomplete markets, this tradeoff is about 75% steeper for borrowing-constrained households. We then build a general equilibrium search model with a two-dimensional job ladder, where jobs differ in both productivity and unemployment risk, and risk-averse workers can only partially self-insure. Without targeting it, the model reproduces our survey's indifference curve slope almost exactly (1.53 vs. 1.63). What does this caution cost the economy? A complete-markets counterfactual would boost job-to-job mobility by 12%. Finally, in recessions we document a "climb to safety": workers redirect their job switches toward safer, lower-paying jobs. Counter-cyclical UI expansions largely undo this, at the cost of higher unemployment. Bottom line: labor market dynamism isn't only about the unemployed finding jobs. It's also about whether employed workers can afford to take risks. Comments and feedback very welcome! Ungated version on Benjamin's website: eml.berkeley.edu/~schoefer/ (just click on the title of our paper).

Interesting discussion with German-speaking economists about monetary policy, financial stability risks from AI, oil markets, the inflationary impact of fiscal policy, central bank communication and the ability of economies to adapt to shocks.

Nächste Woche soll das große #Reformpaket kommen – und es könnte ein Element enthalten, was viele jetzt noch gar nicht auf dem Zettel haben: Nach @handelsblatt-Infos öffnet sich die #SPD für eine Aufweichung beim #Kündigungsschutz. 🧵1/12

2. Auf Seiten der CDU wird zudem diskutiert, die Aufweichung des Kündigungsschutzes um eine „#Flexibilitätsprämie“ zu ergänzen. Diesen hatten @MarkusEconomist, @simon_jaeger & @Schoefer_B kürzlich in einem @handelsblatt-Gastbeitrag ins Spiel gebracht. 5/12

Flexibilitätsprämie: Beschäftigte sollen künftig selbst wählen können – Kündigungsschutz behalten oder gegen Kompensation flexibler arbeiten. Mehr Wahlfreiheit statt weniger Schutz. Unser Gastbeitrag mit @MarkusEconomist und @Schoefer_B heute im @handelsblatt 👇

Vorschlag mit @simon_jaeger und @Schoefer_B um Job-Matching und Arbeitsmarktresilienz zu verbessern: Jeder sollte den Arbeitsplatz haben, der für ihr/n am besten passt. Mehr Gehalt statt Kündigungsschutz handelsblatt.com/100233654.h…

🎉A big thank you to everyone who participated in the PhD Workshop in Labor and Behavioral Economics 2026, hosted at @CEBI_UCPH, University of Copenhagen! The workshop brought together amazing researchers for talks and discussions - and we couldn't have asked for a better crowd.

New CEPR Discussion Paper - DP21569 Off the Labor Supply Curve: The Zero Employer Size Wage Effect Within Large Firms Andre Diegmann, Steffen Müller @IWH_Halle, Benjamin Schoefer @Schoefer_B @UCBerkeley @berkeleyecon ow.ly/E8PO50Z6ItB #CEPR_LE #CEPR_MG #CEPR_OE #EconTwitter

Larger employers pay more: the canonical "size wage effect." Monopsony: To be larger, they *must* pay more<=>labor supply is finitely elastic. Tension: *No* size wage effect w/in multi-unit firms. =>Hiring off, not along, LS curve? New paper w/@AndreDiegmann & Steffen Müller:

The employer size wage effect disappears completely across establishments within the same firm, even though they operate in different local labor markets, from @AndreDiegmann, Steffen Müller, and @Schoefer_B nber.org/papers/w35265

This was a fantastic conference structured around how labor markets function and policies for maximum employment. Many thanks to all the presenters. Thanks to @JeffHorwich for taking the time (on the weekend!) to speak to our presenters and digest all their papers!

"Almost all of the leading, serious quantitative labor economists--in one room." Solid review from our recent "Micro & Macro Foundations of Labor Markets" conf., assembled by our @Simon_Mongey & Patrick Kehoe w/ Elena Pastorino, Magne Mogstad & Erik Hurst. bit.ly/4v86Qp6

Forthcoming in AEJ: Applied Economics: "Deadwood Labor? The Effects of Eliminating Employment Protection for Older Workers" by Emmanuel Saez, Benjamin Schoefer, and David Seim. aeaweb.org/articles?id=10.12…

To all young PhD students in econ & finance: Please make sure you apply for the #YoungEconomistPrize at our #ECBForum at Sintra. This is a once-in-a-lifetime experience where all finalists can present their work and interact with distinguished researchers and policymakers.

Another great round of discussions with German-speaking economists, today on productivity, defense, financial stability, exchange rates, geopolitical risks and the future of Europe. Thanks for joining!