Work

How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Datasets

Year: 2023

Type: article

Abstract: How do households respond to job loss, and which self-insurance channels are most important? By linking customer data from the largest bank in Denmark with information from government administrative registers, we quantify a broad range of responses to job loss in a unified empirical framework. Two response margins stand out: during the first 24 months after job loss, households reduce spending by 30% of the income loss while reduced saving in liquid assets accounts for 50%. Other response margins highlighted in the literature - spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit - are less important.

Source: American Economic Journal Applied Economics

DOI: 10.1257/app.20210206

Authors: Asger Lau Andersen, Amalie Sofie Jensen, Niels Johannesen, Claus Thustrup Kreiner, Søren Leth-Petersen, Adam Sheridan

Institution: University of Copenhagen

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty

Open Access status: green