Looks like a great paper: "... 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." #EconSky www.nber.org/system/files...
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Cautious Careers: Job Mobility under Incomplete Markets Alex Clymo, Piotr Denderski, Yusuf Mercan, and Benjamin Schoefer NBER Working Paper No. 35580 August 2026 JEL No. E24, H20, J2, J62, J64 ABSTRACT 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. Alex Clymo Paris School of Economics alex.clymo@psemail.eu Piotr Denderski University of Leicester and Institute of Economics, Polish Academy of Sciences piotr.denderski@leicester.ac.uk Yusuf Mercan Federal Reserve Bank of Kansas City aymmercan9@gmail.com Benjamin Schoefer University of California, Berkeley Department of Economics and NBER schoefer@berkeley.edu