How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets
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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.
Originalsprog | Engelsk |
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Tidsskrift | American Economic Journal: Applied Economics |
Vol/bind | 15 |
Udgave nummer | 4 |
Sider (fra-til) | 1-29 |
ISSN | 1945-7782 |
DOI | |
Status | Udgivet - 2023 |
ID: 336458423