Abstract
If access to credit is limited (especially when young or unemployed) but “bad” jobs are easy to come by, then job seekers might use short term employment in undesirable jobs as a way to finance consumption during subsequent unemployed search for a “good” job. In this paper we explore this idea by building a theoretical model of job search by risk averse, debt constrained agents. In this model we characterise analytically conditions under which voluntary planned separations occur as agents cycle between accumulating assets in short term employment and unemployed search for more desirable employment.
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