TY - JOUR
T1 - How Do Households Respond to Job Loss?
T2 - Lessons from Multiple High-Frequency Data Sets
AU - Andersen, Asger Lau
AU - Jensen, Amalie Sofie
AU - Johannesen, Niels
AU - Kreiner, Claus Thustrup
AU - Leth-Petersen, Søren
AU - Sheridan, Adam
PY - 2023
Y1 - 2023
N2 - How much and through which channels do households self-insure against job loss? Combining data from a large bank and from government sources, we quantify a broad range of responses to job loss in a unified empirical framework. Cumulated over a two-year period, households reduce spending by 30% of their income loss. They mainly self-insure through adjustments of liquid balances, which account for 50% of the income loss. Other channels—spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit—contribute less to self-insurance. Both overall selfinsurance and the channels vary with household characteristics in intuitive ways.
AB - How much and through which channels do households self-insure against job loss? Combining data from a large bank and from government sources, we quantify a broad range of responses to job loss in a unified empirical framework. Cumulated over a two-year period, households reduce spending by 30% of their income loss. They mainly self-insure through adjustments of liquid balances, which account for 50% of the income loss. Other channels—spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit—contribute less to self-insurance. Both overall selfinsurance and the channels vary with household characteristics in intuitive ways.
U2 - 10.1257/app.20210206
DO - 10.1257/app.20210206
M3 - Journal article
VL - 15
SP - 1
EP - 29
JO - American Economic Journal: Applied Economics
JF - American Economic Journal: Applied Economics
SN - 1945-7782
IS - 4
ER -