• Corpus ID: 202314017

Is Household Heterogeneity Important for Business Cycles

  title={Is Household Heterogeneity Important for Business Cycles},
  author={Youngsoo Jang and Takeki Sunakawa and Minchul Yum},
This paper explores how the interaction between household heterogeneity and progressive government transfers shapes aggregate labor market â€iuctuations. Using a static model of the extensive margin labor supply, we analytically show that greater progressivity in the transfer system leads to greater volatility of low wage workers’ employment and less procyclical average labor productivity. We then build a dynamic general equilibrium model with both idiosyncratic and aggregate productivity… 
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