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How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets

Author

Listed:
  • Asger Lau Andersen

    (CEBI, Department of Economics, University of Copenhagen)

  • Amalie Sofie Jensen

    (Department of Economics, Princeton University)

  • Niels Johannesen

    (CEBI, Department of Economics, University of Copenhagen)

  • Claus Thustrup Kreiner

    (CEBI, Department of Economics, University of Copenhagen)

  • S�ren Leth-Petersen

    (CEBI, Department of Economics, University of Copenhagen)

  • Adam Sheridan

    (CEBI, Department of Economics, University of Copenhagen)

Abstract

How do households respond to job loss, and which self-insurance channels are most important? By linking customer data from the largest bank in Denmark with information from government administrative registers, we quantify a broad range of responses to job loss in a unified empirical framework. Two response margins stand out: during the first 24 months after job loss, households reduce spending by 30% of the income loss while reduced saving in liquid assets accounts for 50%. Other response margins highlighted in the literature - spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit - are less important.

Suggested Citation

  • Asger Lau Andersen & Amalie Sofie Jensen & Niels Johannesen & Claus Thustrup Kreiner & S�ren Leth-Petersen & Adam Sheridan, 2020. "How Do Households Respond to Job Loss? Lessons from Multiple High-Frequency Data Sets," CEBI working paper series 20-12, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    • Handle: RePEc:kud:kucebi:2012
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    File URL: https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_12-20.rev.pdf
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    References listed on IDEAS

    as
    1. John Sabelhaus & David Johnson & Stephen Ash & David Swanson & Thesia I. Garner & John Greenlees & Steve Henderson, 2014. "Is the Consumer Expenditure Survey Representative by Income?," NBER Chapters, in: Improving the Measurement of Consumer Expenditures, pages 241-262, National Bureau of Economic Research, Inc.
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    Cited by:

    1. M. Adam & O. Bonnet & E. Fize & T. Loisel & M. Rault & L. Wilner, 2023. "How does fuel demand respond to price changes? Quasi-experimental evidence based on high-frequency data," Documents de Travail de l'Insee - INSEE Working Papers 2023-17, Institut National de la Statistique et des Etudes Economiques.
    2. Odran Bonnet & Étienne Fize & Tristan Loisel & Lionel Wilner, 2024. "Is Carbon Tax Truly More Salient? Evidence from Fuel Tourism at the France-Germany Border," CESifo Working Paper Series 10918, CESifo.
    3. Figueiredo, Ana & Marie, Olivier & Markiewicz, Agnieszka, 2024. "Job Security and Liquid Wealth," IZA Discussion Papers 16744, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Household economics; unemployment; self-insurance; transaction data;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G52 - Financial Economics - - Household Finance - - - Insurance
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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