Optimal retirement with borrowing constraints and forced unemployment risk
SCIE
SSCI
SCOPUS
- Title
- Optimal retirement with borrowing constraints and forced unemployment risk
- Authors
- Jang B.-G.; Park S.; Zhao H.
- Date Issued
- 2020-09
- Publisher
- ELSEVIER
- Abstract
- In this paper, we study optimal retirement in a two-dimensional incomplete market caused by borrowing constraints and forced unemployment risk. We show that the two aspects jointly affect an individual's optimal consumption, investment, and retirement strategies. In contrast to the complete market case, the endogenously determined wealth threshold for retirement is significantly affected by the two-dimensional market incompleteness, resulting in a lower wealth threshold. We also discuss a possible unemployment insurance scheme for the borrowing-constrained individual to respond to the shocks of forced unemployment. (C) 2020 Elsevier B.V. All rights reserved.
- URI
- https://oasis.postech.ac.kr/handle/2014.oak/107846
- DOI
- 10.1016/j.insmatheco.2020.06.002
- ISSN
- 0167-6687
- Article Type
- Article
- Citation
- INSURANCE MATHEMATICS & ECONOMICS, vol. 94, page. 25 - 39, 2020-09
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