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Unemployment and Consumption: Are Job Losses Less Painful near the Mediterranean?

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Bentolila, Samuel
Ichino, Andrea

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Abstract

In this paper we analyse the relationship between unemployment and consumption. We study this relationship with panel data on households in five countries: Spain and Italy (the South), and Germany, Britain, and the US (the North). Our empirical results indicate that an increase in the duration of unemployment spells of male household heads is associated with smaller consumption losses in Spanish and Italian households. We discuss this finding in the light of different market and institutional frameworks. Given that the coverage and generosity of social welfare institutions are both higher in the North, and that credit and insurance markets are also more developed in the North than in the South, existing theories of consumption indicate that in the South consumption should fall more than in the North when the male household head becomes unemployed. This and other evidence supports the hypothesis that extended family networks, which appear to be stronger near the Mediterranean, provide a fundamental source of insurance against unemployment in southern Europe.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2539.

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Date of creation: Aug 2000
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Handle: RePEc:cpr:ceprdp:2539

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Keywords: Consumption Savings Unemployment

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Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

References listed on IDEAS
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(explanations, 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.)

  1. María Dolores Guilló & Antonia Díaz, 2000. "Family Ties And Unemployment," Working Papers. Serie AD 2000-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  2. Juan F. Jimeno & Diego Rodríguez-Palenzuela, . "Youth unemployment in the OECD: Demographic shifts, labour market institutions, and macroeconomic shocks," Working Papers 2002-15, FEDEA. [Downloadable!]
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  3. C. Vilaplana & José M. Labeaga & S. Jiménez-Martín, 2006. "Further evidence about alcohol consumption and the business cycle," Working Papers 2006-06, FEDEA. [Downloadable!]
  4. Jose Ripoll, 2003. "National Appointments to Multinational Monetary Policy Making: A Role Conflict?," Macroeconomics 0301009, EconWPA. [Downloadable!]
  5. Francois Fontaine, 2003. "Do workers really benefit from their social networks?," Macroeconomics 0311002, EconWPA, revised 07 Jan 2004. [Downloadable!]
    Other versions:
  6. Koeniger, Winfried, 2001. "Labor and Financial Market Interactions: The Case of Labor Income Risk and Car Insurance in the UK 1969-95," IZA Discussion Papers 240, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Marco Manacorda, Barbara Petrongolo, 2005. "Regional Mismatch and Unemployment: Theory and Evidence from Italy, 1977-1998," CELPE Discussion Papers 90, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  8. Namkee Ahn, & Juan F. Jimeno & Arantza Ugidos, . "“Mondays at the sun”: Unemployment, Time Use, and Consumption Patterns in Spain," Working Papers 2003-18, FEDEA. [Downloadable!]
  9. Kugler, Adriana D., 2002. "From Severance Pay to Self-Insurance: Effects of Severance Payments Savings Accounts in Colombia," IZA Discussion Papers 434, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Alger, Ingela & Weibull, Jörgen, 2007. "The Fetters of the Sib: Weber Meets Darwin," Working Paper Series in Economics and Finance 682, Stockholm School of Economics. [Downloadable!]
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  11. Algan, Yann & Cahuc, Pierre, 2005. "The Roots of Low European Employment: Family Culture?," CEPR Discussion Papers 5169, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Klasen, Stephan & Woolard, Ingrid, 2001. "Surviving Unemployment without State Support: Unemployment and Household Formation in South Africa," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  13. Bornhorst, Fabian & Ichino, Andrea & Schlag, Karl & Winter, Eyal, 2004. "Trust and Trustworthiness Among Europeans: South-North Comparison," CEPR Discussion Papers 4378, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Paola Giuliano, 2006. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," IZA Discussion Papers 2042, Institute for the Study of Labor (IZA). [Downloadable!]
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  15. Namkee Ahn & Juan Ramón García & Juan Francisco Jimeno, 2004. "The Impact of Unemployment on Individual Well-Being in the EU," Economics Working Papers 029, European Network of Economic Policy Research Institutes. [Downloadable!]
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    Other versions:
  18. Ingela Alger & Jörgen W. Weibull, 2006. "Altruism and Climate," Boston College Working Papers in Economics 643, Boston College Department of Economics. [Downloadable!]
    Other versions:
  19. Adriana D. Kugler, 2001. "From Severance Pay to Self-insurance: Effects of Severance Payments Savings Accounts in Colombia," Economics Working Papers 592, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  20. Josep Pijoan-Mas, 2003. "Precautionary Savings Or Working Longer Hours?," Working Papers wp2003_0311, CEMFI. [Downloadable!]
    Other versions:
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