Wealth Inequality and Labor Mobility: the Job Trap (JMP)

Abstract. This paper studies how wealth affects workers’ ability to move to higher-paying jobs. Using microdata from the SIPP, I compare similar workers and find that those with higher liquid wealth are 35\% more likely to change jobs than workers with no savings. To explain this pattern, I develop a job ladder model with incomplete markets, risk-averse workers, and wage posting, where firms learn about match quality over time. Because firms gradually screen out workers in bad matches, changing jobs restarts the learning process and raises the risk of job loss. Workers with no liquidity, unable to insure against unemployment risk, prioritize job security over job mobility and remain trapped in low-paying jobs. This mechanism accounts for nearly 60\% of the observed wealth gap in job mobility, and shutting it down yields both higher aggregate mobility and lower income inequality. More generous unemployment insurance provides a potential pathway out of the job trap: higher replacement rates and extended benefit duration increase mobility and welfare, thus reducing inequality. 

• Awards: AEA Summer Economics Fellowship, GSAS Dissertation Fellowship, Summer Dissertation Fellowship

• Federal Reserve Bank of Philadelphia, Dallas Fed Women in Central Banking Workshop, Search and Matching (SaM) annual conference, Midwest Macro, CSWEP session at WEAI, CEBRA annual meeting, Federal Reserve Bank of Kansas City, Green Line Macro Meeting, Boston College, Aarhus Workshop on Labor Economics, Southern Economics Association Annual Meeting

Closing the Gap: Insurance Generosity and Wage Growth at the Bottom of the Ladder, with Carter Bryson

Parental Wealth and Early Labor Market Outcomes, by Holmberg, Simmons and Trapeznikova [slides]; 

prepared for the 4th DC Search and Matching Workshop, April 2025