Advanced Search
MyIDEAS: Login

Labor Supply and Consumption Smoothing When Income Shocks Are Non-Insurable

Contents:

Author Info

  • Danzer, Alexander M.

    ()
    (University of Munich)

Abstract

The paper investigates how employees use secondary employment to smooth out consumption shortfalls from non-anticipated wage shocks in their main employment. The identification strategy exploits surprising changes in firms’ wage payment and repayment behavior in Ukraine. Based on unique nationally representative panel data, the econometric approach accounts for workers' unobserved heterogeneity and measurement error in the wage shock information. The estimated labor supply responses suggest that secondary activities are used as temporary coping strategies against wage shocks and that they closely follow the lifecycle of wage arrears. Households that engage in secondary employment can successfully smooth their consumption. The results are robust to several alternative hypotheses concerning the observed labor supply pattern.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp5499.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5499.

as in new window
Length: 68 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5499

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: dual job holding; wage shock; consumption smoothing; subsidiary farming; reaction time to shocks;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Boeri, Tito & Flinn, Christopher J., 1999. "Returns to Mobility in the Transition to a Market Economy," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 4-32, March.
  2. John S. Earle & Andrew Spicer & Klara Z. Sabirianova, 2003. "Community Norms and Organizational Practices: The Legitimization of Wage Arrears in Russia, 1992-1999," Upjohn Working Papers and Journal Articles 03-97, W.E. Upjohn Institute for Employment Research.
  3. Lehmann, Hartmut & Terrell, Katherine, 2006. "The Ukrainian labor market in transition: Evidence from a new panel data set," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 195-199, June.
  4. Boyarchuk, Dmytro & Maliar, Lilia & Maliar, Serguei, 2005. "The consumption and welfare implications of wage arrears in transition economies," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 540-564, September.
  5. Hamish Low & Costas Meghir & Luigi Pistaferri, 2009. "Wage Risk and Employment Risk over the Life Cycle," NBER Working Papers 14901, National Bureau of Economic Research, Inc.
  6. Christopher J. Gerry & Byung-Yeon Kim & Carmen A Li, 2004. "The gender wage gap and wage arrears in Russia: Evidence from the RLMS," Journal of Population Economics, Springer, vol. 17(2), pages 267-288, 06.
  7. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Insecurity and Wage Arrears in the Russian Federation," IZA Discussion Papers 65, Institute for the Study of Labor (IZA).
  8. Hartmut Lehmann & Jonathan Wadsworth & Alessandro Asquisti, 1999. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," LICOS Discussion Papers 7999, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  9. Smith Conway, Karen & Kimmel, Jean, 1998. "Male labor supply estimates and the decision to moonlight," Labour Economics, Elsevier, vol. 5(2), pages 135-166, June.
  10. Alessandra Guariglia & Byung-Yeon Kim, 2003. "Wage arrears uncertainty and precautionary saving in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 493-512, 09.
  11. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-72, July.
  12. Lehmann, Hartmut & Pignatti, Norberto & Wadsworth, Jonathan, 2006. "The incidence and cost of job loss in the Ukrainian labor market," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 248-271, June.
  13. Christina H. Paxson & Nachum Sicherman, 1994. "The Dynamics of Dual-Job Holding and Job Mobility," NBER Working Papers 4968, National Bureau of Economic Research, Inc.
  14. Yuri Andrienko & Sergei Guriev, 2004. "Determinants of interregional mobility in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 1-27, 03.
  15. Jan Fidrmuc, 2002. "Migration and regional adjustment to asymmetric shocks in transition economies," CPB Discussion Paper 7, CPB Netherlands Bureau for Economic Policy Analysis.
  16. Luigi Pistaferri, 2003. "Anticipated and Unanticipated Wage Changes, Wage Risk, and Intertemporal Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 729-754, July.
  17. John S. Earle & Klara Z. Sabirianova, 2002. "How Late to Pay? Understanding Wage Arrears in Russia," Upjohn Working Papers and Journal Articles 02-77, W.E. Upjohn Institute for Employment Research.
  18. Lyubov A. Kurkalova & Helen H. Jensen, 2000. "Relative Growth of Subsidiary Farming in Post-Soviet Economies: A Labor Supply Story," Center for Agricultural and Rural Development (CARD) Publications 00-wp249, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  19. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  20. Kjetil Storesletten & Chris I. Telmer & Amir Yaron, 2001. "How Important Are Idiosyncratic Shocks? Evidence from Labor Supply," American Economic Review, American Economic Association, vol. 91(2), pages 413-417, May.
  21. John S. Earle & Klara Sabirianova Peter, 2009. "Complementarity and Custom in Wage Contract Violation," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 832-849, November.
  22. Alessandra Guariglia & Byung-Yeon Kim, 2006. "The dynamics of moonlighting in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 1-45, 03.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5499. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.