Does job security matter for consumption? An analysis on Italian microdata

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Does job security matter for consumption? An analysis on Italian microdata

Author Info

Clemente De Lucia (Ministry of Economics and Finance)
Mara Meacci () (Ministry of Economics and Finance)

Abstract

This paper investigates if labour income uncertainty, particularly as related to the development and diffusion of fixed and short-term work contracts, may have played a role in determining the recent decline of the marginal propensity to consume of Italian households. We analyse this issue in the framework of a standard precautionary saving model, proxing labour income uncertainty with subjective job security measures. Due to the lack of a unique dataset containing all the relevant information, we adopt a two-step two-sample procedure. Estimation results, based on cross-section data for the year 2000, point to a potentially substantial effect of job security perception on household’s nondurables consumption. Its actual capability to prompt aggregate consumption adjustments is however likely to be very limited.

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Paper provided by ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY) in its series ISAE Working Papers with number 54.

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Length: 32 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:isa:wpaper:54

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