Question 1 With probability A, an employed agent loses employment, and becomes unemployed at the beginning of each period. In this case, the agent does not receive the wage in the period. Instead, the agent is matched with an employer with probability /1 within the same period, like the other unemployed agents.
With probability an employed agent has chance to be independent. If the agent chooses to be independent, then the agent receives the wage w in the period, and a constant income, y, from the next period. Assume y > w.
With probability 1 — A — cp, an employed agent remains employed, receiving the wage w in the period, with no chance to change the agent’s state until the next period.
– ?; A
A 2 :37 tn 2022-0
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