Labour supply as a buffer: evidence from UK households
AbstractThis paper examines labour supply adjustment – both hours worked and participation decisions. The analysis focuses on the response of each to financial shocks, employing data from the British Household Panel Survey. Results suggest that employees whose financial situation deteriorates relative to what they expected, increase their labour supply in response. That response is consistent with models of self-insurance that incorporate labour supply flexibility. The shock reflects several factors including financial wealth and a partner’s employment situation. The response is significantly larger for those who change job, consistent with the importance of hours constraints within jobs. The propensity to participate in the labour market also appears to respond to the financial shock but that is somewhat less robust than the hours response.
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Bibliographic InfoPaper provided by Bank of England in its series Bank of England working papers with number 426.
Length: 38 pages
Date of creation: 27 May 2011
Date of revision:
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More information through EDIRC
Labour supply; self-insurance.;
Find related papers by JEL classification:
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-04 (All new papers)
- NEP-EUR-2011-06-04 (Microeconomic European Issues)
- NEP-IAS-2011-06-04 (Insurance Economics)
- NEP-LAB-2011-06-04 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Benito, Andrew & Saleheen, Jumana, 2012. "Labour Supply as a Buffer: Evidence from UK Households," IZA Discussion Papers 6506, Institute for the Study of Labor (IZA).
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