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Liquidity constraints and labor supply

Author

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  • Mariacristina Rossi

    (University of Turin and CeRP, Collegio Carlo Alberto)

  • Serena Trucchi

    (University of Bologna)

Abstract

In this paper we show how liquidity constraints shape Italian households' decisions with regard to supplying their labor. One way to neutralize binding liquidity constraints is by resorting to supplying additional labor, instead of reducing consumption patterns. We estimate whether this channel is at work by using the Survey of Households Income and Wealth (SHIW) sample. In our analysis we are also able to detect whether actual labor supply differs from the desired one. Our results show that liquidity constraints foster female participation in the labor force and increase the intensity in the supply of men's labor.

Suggested Citation

  • Mariacristina Rossi & Serena Trucchi, 2012. "Liquidity constraints and labor supply," CeRP Working Papers 127, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:127
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    Cited by:

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    3. Zhou, Zhengyi, 2022. "The effects of state-led relocation on labor market participation: Evidence from China," China Economic Review, Elsevier, vol. 73(C).
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    5. Ian Fillmore & Trevor Gallen, 2019. "Heterogeneity in Talent or in Tastes? Implications for Redistributive Taxation," 2019 Meeting Papers 94, Society for Economic Dynamics.
    6. Osmani, Ahmad Reshad & Okunade, Albert A., 2019. "Cancer survivors in the labor market: Evidence from recent US micro-panel data," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 80, pages 202-221.
    7. Amparo Nagore García & Mariacristina Rossi & Arthur Soest, 2021. "Retirement of the self-employed in the Netherlands," Small Business Economics, Springer, vol. 56(1), pages 385-402, January.
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    9. Amparo Nagore Garcia & Mariacristina Rossi & Arthur van Soest, 2018. "Labour Market Decisions of the Self-Employed in the Netherlands at the Statutory Retirement Age," Working papers 057, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    10. Anil Kumar & Che-Yuan Liang, 2018. "Labor Market Effects of Credit Constraints: Evidence from a Natural Experiment," Working Papers 1810, Federal Reserve Bank of Dallas, revised 04 Feb 2023.
    11. Choi, Sangyup & Shin, Junhyeok, 2023. "Household indebtedness and the macroeconomic effects of tax changes," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 22-52.
    12. Demirel, Ufuk Devrim, 2021. "The short-term effects of tax changes: The role of state dependence," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 918-934.
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    15. Abo-Zaid, Salem & Kamara, Ahmed H., 2020. "Credit Constraints and the Government Spending Multiplier," Journal of Economic Dynamics and Control, Elsevier, vol. 116(C).

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    • D1 - Microeconomics - - Household Behavior

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